Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped $1.50 to close above $1,295 as a rising dollar reduced demand for alternative stores of value. The metal then slid another $4 after hours when newly-released minutes of the last FOMC meeting suggested that the Fed may raise interest rates sooner than expected if labor market improvements continue.

The dollar extended its rally on follow-through from yesterday's strong data on new home starts. The recent struggles of the housing market havebeen a key concern for Fed Chair Janet Yellen in her calculus about when to raise rates. The buck then strengthened further after the Fed minutes showed a growing consensus that monetary policy may tighten sooner than expected if the unemployment rate drops more quickly than forecast. However, the central bankers also agreed that the labor market is still too weak to alter rates anytime soon.

Rising rates strengthen the dollar in part by making it more attractive to forex traders and investors. A stronger dollar weighs on the price of gold and other commodities denominated in the currency by making them more expensive to holders of other currencies. The other metals outpaced gold's declines, with silver dropping 1.1% while platinum and palladium surrendered 0.7% and 1.4%, respectively.

At the Comex close: December gold dipped $1.50 to $1,295.20; September silver dropped 22 cents to $19.41; October platinum lost $10.30 to $1,429.20; September palladium fell $12.35 to $868.45 an ounce.