Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.2% to close just over $1,253 as traders the dollar edged higher before the release of minutes from the recent Fed meeting. However, the metal then rallied above $1,260 in electronic trade after the minutes signaled a more gradual approach to rate hikes than many expected.

At their May meeting, Fed members were largely in agreement that another rate increase should happen "soon," according the minutes released late today. This message was widely expected, with traders already pricing-in a quarter-point hike in June.

However, the central bankers also agreed that they should begin to shrink the $4.5 trillion balance sheet accumulated through quantitative easing. The Fed does not want to sell its holdings; rather, it plans to gradually reduce the assets not reinvesting them upon their maturity.

The dollar fell on the balance sheet news, sliding from gains to modest losses, as traders perceived the roll-off in holdings as a way for the Fed to reduce stimulus and return the lending markets to normal gradually, without having to be aggressive with future interest rates increases. A more aggressive rate stance would boost the dollar, whereas a softer stance supports gold prices by pressuring the buck.

The other precious metals also finished lower, with silver edging down 0.1% while platinum and palladium slid 0.2% and 1.4%, respectively.

At the Comex close: June gold dipped $2.40 to $1,253.10; July silver edged down 2 cents to $17.12; July platinum slid $2.10 to $947.30; and June palladium lost $10.70 to $761.65 an ounce.