Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 2.4% to close at a two-week low under $1,255 as rising Fed optimism and falling jobless claims prompted traders to take profits from the metal's 9% rally this month.

Yesterday's FOMC policy statement was more upbeat than previous editions, containing language upgrading the economy's expansion from "moderate" to "solid," and job growth from "solid" to "strong." But because the Fed also maintained its promise to be "patient" about deciding when to raise interest rates, the market registered little reaction with the metal falling only $3 in response after hours.

This morning, however, sentiment shifted after reports that weekly jobless claims fell to a 15-year low last week. The surprisingly strong data underscored the sense of "strong" job-growth described by the Fed�despite the fact that the tally was for a holiday-shortened week. As a result, traders speculated that the first rate hikes may come mid-2015, after all. Prior to yesterday's statement and today's data, most analysts were looking toward September at the earliest, with some, like Morgan Stanley, saying no hike until the first quarter of 2016.

The dollar jumped against most rivals, weighing on gold and other commodities denominated in it for international trade. Rising interest rates tend to increase demand for the dollar as a store of value. Silver tumbled a whopping 7.3% while platinum and palladium dropped 3.3% and 2.8%, respectively.

At the Comex close: February gold fell $31.30 to $1,254.60; March silver tumbled $1.32 to $16.77; April platinum lost $41.20 to $1,217.30; and March palladium dropped $24.70 to $771.60 an ounce.