Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.1% to close under $1,427 after the Fed moderated yesterday's strongly dovish comments from a prominent official, shifting the outlook for interest rates and prompting traders to take profits. The metal still finished the week 1% higher.

New York Fed President John Williams said yesterday that the Fed should aggressively cut interest rates at the first sign of distress to the economy, thereby jolting consumers out of low inflation expectations. Williams is one of the most influential voices in the committee that sets monetary policy.

Traders took the comments as an endorsement of a half-point rate cut when the central bank meets later this month, driving gold futures to a 6-year high above $1,454 in intraday trading. Sharply lower interest rates would weaken the dollar by reducing its attractiveness to investors seeking higher yield, supporting gold in turn by making it less expensive overseas.

Today, however, Williams' comments were walked back by a spokesperson from the New York Fed, who maintained that the central banker was only speaking theoretically, not about immediate policy decisions. CME FedWatch quickly dropped the odds of a half-point cut in July from more than 60% to around 22%, based on trading in Fed-fund futures. The odds of at least a quarter-point cut remain 100%.

The dollar promptly gained 0.4% after the New York Fed's retraction while gold retraced its speculative jump above $1,454 in intraday trading to its session close under $1,427.

The other precious metals were mixed on the day and week. Silver was virtually flat for a weekly surge of 6.3%. Platinum added 0.3% today and 1.2% this week. Palladium dropped 0.2% on the day and 2.2% on the week.

At the Comex close: August gold dipped $1.40 to $1,426.70; September silver stayed at $16.20; October platinum added $2.20, to $852.10; and September dipped $3.60 to $1,508.30 an ounce.