Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.6% to close under $1,782 after upbeat economic lifted yields and the dollar, undercutting alternative stores of value.

The US services sector unexpectedly grew in November, according to the ISM, suggesting resilience in the lion's share economy despite higher interest rates and strong inflation. Services businesses comprise more than two-thirds GDP. Separately, the Commerce Department reported US factory orders rose 1%.

Following Friday's hotter-than-expected jobs report, the additional strong data renewed speculation that the Fed will remain hyper-aggressive with interest rates to cool growth and drive down inflation. As recently as last week, traders had been expecting the central bank to ease up in December. Now they're not so sure.

Benchmark 10-year Treasury yields popped back above 3.6% on the shifting Fed view, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar added 0.8% against major rivals. A stronger dollar weighs on gold and other commodities by making them less expensive overseas.

Falling oil prices also hurt gold. Global benchmark Brent crude lost 3.4% to around $82.60 per barrel, the lowest since January, as higher interest rates are expected to limit demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also lower. Silver fell 3.6%; platinum dropped 1.9%; and palladium lost 2.1%.

At the Comex close: February gold fell $28.30 to $1,781.30; March silver slid 83 cents to $22.42; January platinum dropped $19.10 to $1,007.50; and March palladium shed $39.80 to $1,861.30 an ounce.