Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.8% to close below $1,338 as the dollar rallied on strong employment and wage data, boosting expectations that the Fed will raise interest rates to prevent a sharp rise in inflation. The metal finished the week 1.5% lower.

The economy added 200,000 jobs in January, beating expectations, and the unemployment rate was unchanged at 4.1%, a 17-year low. More impressive, average hourly wages jumped 0.3% for a year-over-year increase of 2.9%, the most since 2009.

Though strong, the wage gains were qualified by a 0.2% decrease in the average work week, which mathematically raised hourly wages for salaried employees without actually increasing their earnings.

The dollar rallied 0.5% against major rivals as traders speculated that rising wages may drive inflation higher and prompt the Federal Reserve to be more aggressive in tightening monetary policy this year.

CME FedWatch now puts the odds of two rate hikes by June at greater than 50%. Higher rates boost the dollar by attracting foreign exchange investors seeking higher yield. A stronger dollar, in turn, weighs on gold and other commodities by making them more expensive in other currencies.

The other precious metals were mixed on the day but lower for the week. Silver fell 2.6% for a weekly loss of 4.2%. Platinum slid 0.8% today and 1.9% this week. Palladium added 2% on the day but still dropped 3.7% on the week.

At the Comex close: April gold fell $10.60 to $1,337.30; March silver lost 45 cents to $16.71; April platinum slid $8.40 to $999.40; and March palladium gained $20.25 to $1,044.95 an ounce.