Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold dropped 1.4% to close under $1,174 as the dollar rallied on strong U.S. economic data. The metal finished November down 7.9% for its weakest monthly performance since June 2013.

Private employers added 216,000 jobs in November, according to ADP, handily beating forecasts and raising optimism that the more-authoritative U.S. nonfarm payrolls report, due tomorrow, will also come in stronger than expected.

In a separate report, consumer spending, personal income, and inflation rose in October according to the Commerce Department, signaling solid momentum in the economy. In addition, the Chicago Fed region's PMI report jumped to a two-year high as the factory sector, a persistent weakness in the post-recession economy, is beginning to find its footing.

The dollar rallied another 0.5% against major rivals as the breadth of strong data all but cemented the likelihood of a rate hike from the Fed in December. A rising dollar pressured gold and other commodities denominated in it for international trade by making them more expensive overseas.

OPEC and other large oil producers agreed to cut production by 3%, sending crude prices 8% higher to nearly $50 per barrel. While gold typically trades in sympathy with rising oil as a hedge against long-term inflation, the two commodities diverged today as traders speculated that rising energy prices will trigger more aggressive rate hikes from the Fed, further boosting the dollar and weighing on gold in the short term.

The other precious metals were mostly lower for the day and month. Silver dropped 1.5% today and 7.6% in November. Platinum slid 1.1% for a monthly loss of 7%. Outlier palladium, closely tied to the auto industry, added 0.6% today and a whopping 24% this month.

At the Comex close: February gold fell $16.90 to $1,173.90; March silver dropped 25 cents to $16.48; January platinum lost $10.30 to $911; and march palladium added $4.90 to $770.15 an ounce.