Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.4% in thin holiday trade, closing at $1,173.50 as improving labor data bolstered the case for the Fed to raise interest rates by mid-2015.

Jobless claims in the U.S. unexpectedly fell to a seven-week low last week, underscoring momentum in the labor market and adding to the growing body of evidence that the U.S. economy is recovering. Earlier this week, third quarter GDP was revised to 5% by the Commerce Department, the best quarterly growth in eleven years, and consumer sentiment jumped to a seven-year high this month, according to Thompson Reuters.

Not all recent reports are quite so positive. Orders for durable goods fell last month by more than expected. Necessary for sustaining the manufacturing sector and overall GDP, orders for big-ticket items have declined in three of the past four months with little improvement on the horizon. The crucial housing sector, too, is showing signs of a slowdown, with sales of new homes declining to a four month low in November, while sales of existing homes fell by more than 6%.

Nonetheless, the generally upbeat data is causing traders to speculate that the Fed will begin to lift interest rates sometime in mid-2015. Higher rates will strengthen the dollar and weigh on gold and other commodities denominated in the currency for international trade by making them more expensive to foreign buyers. Gold lost 1.9% in this shortened week as the dollar rallied behind prospects for rising rates.

The other precious metals tracked gold lower. Silver also lost 0.4% today and 1.9% this week. Platinum dipped 0.1% today and 0.5% this week. Palladium fell 0.8% on the day but edged up 0.3% for the week.

At the Comex close: February gold fell $4.50 to $1,173.50; March silver lost 6 cents to $15.71; January platinum dropped 60 cents to $1,191.10; and March palladium shed $6.25 to $807.80 an ounce.