Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold fell 1.3% to close at $2,343 despite downticks in yields and the dollar as traders took profits from last week's 2.9% rally ahead of key CPI data this week. Silver slipped 0.2% to finish at $28.22 an ounce.

Recent data showing weakness in the labor market and consumer sentiment have shifted the outlook for interest rates from mildly hawkish to moderately dovish, with every notably economic report adding to further speculation in either direction.

The new consumer inflation and retail sales data due Wednesday could go far toward determining whether the Fed pivots to lower rates in coming months. After adding 0.4% in March, consumer inflation is forecast to moderate to 0.3% in April. If retail sales also softened, the Fed would feel far more comfortable cutting rates this year.

Fed fund futures put the odds of an initial quarter-point cut in September at 61%, with the chances of two cuts by December at around 50/50.

Benchmark 10-yer Treasury yields and the dollar both edged down as traders hedged against the possibility of a dovish turn.

While gold remains supported by unprecedented central bank buying and aggressive physical demand in China, its trading direction in the short term is likely to be choppy, guided largely by the fluctuating prospects for US interest rates.

Platinum picked up 0.4% while palladium fell 1.6%.

At the New York spot close: gold fell $32 to $2,343; silver slipped a nickel to $28.22; platinum picked up $3.60 to $1,010.80; and palladium shed $15.90 to $965.80 an ounce.