Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 2.5%, closing at a three-week low near $1,147, as markets recalibrated from yesterday's surprisingly hawkish statement from the Fed on interest rates.

After closing at a one-week high on Wednesday with a gain of nearly 1%, gold abruptly reversed itself in electronic trade after the Fed said, in no uncertain terms, that a rate hike in December is a strong possibility. Today's session extended yesterday's after-hours losses as stop-losses were triggered and momentum carried the metal lower still.

A recent wave of weaker U.S. and global economic data, including two poor jobs reports, caused investors to think that the Fed would postpone its first rate hike since 2006 until sometime next year. Yesterday's post-meeting statement showed the committee looking past recent weakness in labor markets and downplaying turmoil in global financial markets, saying it has yet to determine "whether it will be appropriate to raise the target range at its next meeting."

While a December hike is no fait accompli, its chances have improved substantially. According to the CME Fedwatch tool, which tracks trading in Fed Fund futures, the odds for December have risen from 34% at the beginning of the week to 50% today.

The metals markets largely ignored reports that GDP in the third quarter fell to just 1.5% and pending home sales fell unexpectedly in September.

The other precious metals were also lower, with silver falling 4.6% while platinum and palladium lost 1.9% and 2.2%, respectively.

At the Comex close: December gold fell $28.80 to $1,147.30; December silver lost 74 cents to $15.55; January platinum slid $19.50 to $993.30; and December palladium for surrendered $15.30 to $670.80 an ounce.