Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.3% to close under $1,220 as traders adjusted their calculus about possible rate hikes after last week's upbeat reports on jobs and manufacturing.

Government data released on Friday showed U.S. nonfarm payrolls adding 215,000 new jobs in March, more than expected, and hourly wages rising 0.3%. In addition, the ISM said manufacturing expanded for the first time in six months.

The solid data helped to counterbalance the dovish tone set earlier in the week by Fed Chair Janet Yellen when she called for caution in future rate hikes because of global economic risk and weak inflation.

Boston Fed Chair Eric Rosengren added to hawkish sentiment today by suggesting that hikes will come sooner and more frequently than the market predicts. The CME Fedwatch tool currently forecasts the next hike occurring in September.

Gold's losses were limited by weak U.S. factory data from the Commerce Department. New orders for manufactured goods fell in February and business spending on capital goods was much less than initially thought.

After tightening last December for the first time in nearly 10 years, the Fed's outlook has been far less confident this year, helping gold to rise more than 16% during Q1 for its best quarterly performance in 30 years.

Lower rates tend to weaken the dollar, supporting gold and other commodities denominated in it for international trade by making them less expensive to users of other currencies. Low rates also reduce the opportunity cost for holding gold, which pays no yield.

The other precious metals also fell, with silver dropping 0.7% while platinum lost 1.1% and palladium 1.5%.

At the Comex close: June gold slipped $4.20 to $1,219.30; May silver dropped 11 cents to $14.95; July platinum lid $11.40 to $955.20; and June palladium shed $8.40 to $560.90 an ounce.