Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Notching its third straight win, gold gained 0.6% to close at a three-month high above $1,225 as falling wholesale inflation pressured the dollar and reduced the likelihood of a mid-year rate increase from the Federal Reserve.

U.S. producer prices fell 0.4% in April, resuming their downtrend as the unusually strong dollar kept down the cost of imported energy and raw materials. In the year through April, wholesale prices have fallen 1.3%, the most in five years. Falling inflation is a deep concern of the Fed, and remains a key reason for the central bank to hold interest rates low for longer.

Equities rallied on the prospect of a further delay in the first rate hike, with the S&P 500 rising 1% to a new all-time high. Meanwhile, the dollar fell broadly for the third straight session, supporting gold and other commodities by making them less expensive to foreign buyers.

The World Gold Council released its Gold Demand Trends for Q1 2015. While overall global demand slipped because of a 3% decline in jewelry consumption, investment demand rose 4% and central banks bought a net 119 tonnes, extending their buying streak to 17 consecutive quarters.

The other precious metals were mixed, with silver and platinum jumping 1.4% and 1%, respectively, while outlier palladium fell 1.3%.

At the Comex close: June gold gained $7 to $1,225.20; July silver jumped 24 cents to $17.46; July platinum added $11.60, to $1,162.40; and June palladium fell $9.90 to $779.50 an ounce.