Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.1% to close under $1,170 as robust U.S. economic data and rising oil prices pushed investors into higher-yielding assets.

Factory output rose in November, according to the ISM manufacturing index, signaling new life in the long-moribund sector. Following yesterday's upbeat private payrolls report and solid data on consumer spending and personal income gains, the report suggests improving momentum in the economy to close the year.

Oil prices jumped another 1.7%, adding to yesterday's surge of nearly 9%, as traders digest OPEC's agreement to cut production by 3%.

Treasury yields climbed again, with the benchmark 10-year note hitting a 17-month high, as bond market price-in expectations for significantly higher inflation. Rising oil prices are seen as ultimately creating upward pressure on consumer prices, and Donald Trump's promises to rebuild infrastructure while slashing taxes and increasing tariffs on imported goods are also viewed as highly inflationary.

In the short term, rising inflation-expectations may pressure gold by boosting the dollar as the Fed could raise interest rates faster than previous thought, attracting forex investment in search of higher yield. But in the longer term, rising inflation is typically bullish for gold as investors seek hedges to protect purchasing power.

The other precious metals were mixed, with silver and platinum adding 0.1% and 0.2% while palladium dropped 2.7%.

At the Comex close: February gold fell $4.50 to $1,169.40; March silver picked up 2 cents to $16.50; January platinum added $1.40 to $911.13; and March palladium fell $20.95 to $751.70 an ounce.