Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold eased 0.4% to close below $1,970 as yields and the dollar drifted higher ahead of this week's Fed decision on interest rates and data releases on consumer and wholesale inflation. It was the metal's second day of minor declines.

The Federal Reserve begins its two-day policy meeting tomorrow amid widespread speculation that it will leave interest rates unchanged, if only for now. Fed funds futures traders see a 76% likelihood of no hike in June, followed by a 58% probability of a quarter-point increase in July.

Tomorrow's release of the recent Consumer Price Index and Thursday's Produce Price index for May should provide greater clarity on the course of monetary policy.

Benchmark 10-year Treasury yields inched slightly higher, weighing on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar added less than 0.1% against major rivals. The ECB is expected to increase rates by a quarter-point both this week and in July, lending support to the euro. A stronger dollar pressures gold and other commodities by making them pricier overseas.

Also weighing on gold, oil prices tumbled more than 4% to multi-week lows just above $67 per barrel on rising global supplies and worries about demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mostly lower, with silver and platinum losing 1.4% and 1.7%, respectively, while palladium picked up 2.8%.

At the Comex close: August gold slipped $7.50 to $1,969.70; July silver lost 35 cents to $24.06; July platinum shed $17.50 to $995.30; and September palladium picked up $36.30 to $1,341.10 an ounce.