Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.3%, closing under $1,185, as risk-appetite returned to Wall Street, driven by rising merger activity and a bold new stimulus plan in China.

China announced new measures to boost its slowing economy by creating a modern Silk Road improving infrastructural links from Asia to Europe and Africa. The new spending, forecast to be around $50 billion this year, is intended to benefit a wide range of industries and facilitate international trade. China says the project will generate $2.5 trillion in trade over the next decade.

China's equity markets jumped 3% on the announcement, pulling other global markets higher. U.S. markets were further fueled by mergers among drugmakers and biotech companies, pushing the Dow up 1.6%. Eurozone business confidence jumped to its highest level since 2011 in March.

The dollar rose against major rivals, responding in part to Fed Chair Janet Yellen's statement on Friday that rate increases are likely "sometime this year." Yellen qualified her position, however, by stressing that increases will come slowly and gradually, once they begin. She also emphasized that the Fed will remain on hold if key inflation indicators weakened further. A rising dollar pressures gold and other commodities by making them more expensive to foreign buyers.

The other precious metals tracked lower with gold. Silver lost 2.3% while platinum and palladium fell 2.3% and 1.6%, respectively.

At the Comex close: April gold fell $15 to $1,184.80; May silver dropped 39 cents to $16.67; April platinum lost $26.70 to $1,116.90; and June palladium declined by $12 to $729 an ounce.