Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold dropped 0.7% to close at $1,248.50 as the Fed signaled its intention to continue raising interest rates this year, boosting the dollar and diminishing demand for alternative stores of value.

After its two-day meeting, the FOMC left rates unchanged, as expected. However, its accompanying policy statement was somewhat more hawkish than expected, expressing confidence in the economy and dismissing weak first-quarter growth as "transitory."

Traders took the Fed as implying that a June hike is very much on the table despite Q1's moribund 0.8% rise in GDP and a succession of soft economic reports in recent weeks. The central bank did note that inflation declined but is still running close to the 2% target.

The dollar added 0.3% against a basket of rivals and hit a six-week high against the safe-haven yen on the Fed statement, pressuring gold and other commodities denominated in it for international trade by making them more expensive overseas.

ADP reported that private-sector hiring slowed in April, with employers adding 177,000, the fewest since December. The government's more authoritative nonfarm payrolls report is due on Friday.

The other precious metals were also lower, with silver dropping 1.7% while platinum and palladium lost 2.3% and 1.8%, respectively.

At the Comex close: June gold fell $8.50 to $1,248.50; July silver slid 29 cents to $16.54; July platinum $21.29 to $904.40; and June palladium dropped $14.65 to $799.30 an ounce.