Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Following a two-day rally of 1.6%, gold gave back 1.2% today to close just above $1,231 after flat consumer prices in November diminished the need for inflation hedges. The U.S. cost of living remained unchanged last month while core inflation, which excludes fuel and food, inched up 0.2%. Traders took the opportunity to cash out some gains from the last two sessions as they await tomorrow's FOMC statement on monetary policy.

Consumer prices have risen at an annual rate of just 1.2% over the past year, well under the Fed's target of 2%, which gives the central bank plenty of cover to maintain quantitative easing at current levels if it chooses. Last week's elevated report on new jobless claims, which hit a two-month high, could also delay the taper until January or February. However, a recent wave of upbeat data and an apparent budget agreement in Congress preventing another damaging government shutdown may provide the justification to start scaling back stimulus. In a CNBC survey conducted this week, traders say gold could test $1,300 this month if the Fed refrains from tapering in December.

The other precious metals followed gold lower, with silver sliding 1.3% while siste metals platinum and palladium lost 1.1% and 2.1%, respectively.

At the Comex close: February gold surrendered $14.30 to $1,230.10; March silver lost 26 cents to $19.84; January platinum dropped $15.50 to $1,344.60; and March palladium gave up $15.30 to $701.05 an ounce.