Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dropped 0.6% to close just over $1,203 as traders hedged positions ahead of today's release of the minutes from the March FOMC meeting. The metal then slid further to $1,197 in electronic trade following the release, responding to an increasingly hawkish bent toward policy among Fed officials.

As expressed in the record, "several participants" were open to a June rate hike despite low inflation and weak wage-gains, indicating a growing inclination toward normalizing monetary policy soon. Other members argued for hiking rates later this year, and a couple said the environment called for holding off until 2016.

Notably, the minutes are from a meeting held before the recent string of reports showing significant slowdowns in jobs, manufacturing, business investment, and overall economic growth, and therefore may not reflect current thinking. This week, Narayana Kocherlakota of Minneapolis called for a late 2016 liftoff because of the precarious recovery, and William Dudley of New York indicated that the prospect for rate hikes has become more complicated.

Rising rates are expected to strengthen the dollar, in turn weighing on gold and other commodities denominated in it for international trade by making them more buyers outside of the U.S.

The other precious metals were also down. Silver fell 2.3% while platinum and palladium lost 0.7% and 1.7%, respectively.

At the Comex close: June gold dropped $7.50 to $1,203.10; May silver fell 39 cents to $16.45; July platinum slipped $7.60 to $1,166.30; and June palladium lost $13.30 to $755.70 an ounce.