Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dropped 1.1%, holding above $1,245, as traders took profits ahead of this week's meeting of the Federal Reserve. The metal reached a 13-month high above $1,272 late last week after the European Central Bank signaled the end of rate cuts, lending support to the euro against the dollar.

The dollar rebounded today, adding nearly 0.6% against major rivals, on speculation that the Fed may strike a hawkish stance toward interest rates in its post-meeting policy statement, due on Wednesday. A stronger dollar pressures gold and other commodities denominated in it for international trade by making them more expensive overseas.

The Fed is unlikely to announce a rate hike at this meeting. But stronger data in recent weeks suggest the economy is gathering momentum after a rough start to the year, which means the Fed may telegraph a hike for April or June, when next they meet.

Job growth beat expectations in February and demand for factory goods is building. Perhaps most important, inflation is starting to perk up, with the Fed's preferred gauge rising to 1.7% in January, closer to their stated target of 2%.

The other precious metals also finished lower, with silver flaling 0.5% while platinum and palladium slid 0.4% and 1.2%, respectively.

At the Comex close: April gold dropped $14.30 to $1,245.10; May silver fell 8 cents to $15.52; April platinum slid $4.30 to $965.40; and June palladium lost $7.15 to $572.80 an ounce.