Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold was virtually flat at $2,304.50 as the dollar edged up and Treasury yields edged down ahead of tomorrows crucial CPI release and conclusion of the Feds meeting on monetary policy. Silver fell 2.1% to $29.13 an ounce.

The Federal Reserve commenced its two-day meeting with the markets expecting the interest rate to remain unchanged between 5.25% and 5.50%. But all eyes will be on the quarterly dot plot economic projection to see whether the March forecast of three rate cuts this year has been changed.

As late as last week, Fed fund futures markets put odds of a quarter-point cut in September more than 70%, a second one before year end. But the stronger-than-expected nonfarm payrolls report released last Friday changed the calculus, dropping the odds to 50/50.

Also crucial to the rate outlook will be the consumer price index for May. Most forecasters anticipate a slight rise of 0.1%, which would mark the second straight month of slowing inflation.

Benchmark 10-year Treasury yields retreat slightly to just above 4.4%, supporting gold by decreasing the opportunity cost for holding it instead of bonds for safety.

But the dollar rose 0.1% to a four-week high against major rivals on carryover from the strong payrolls report, pressuring gold and other commodities by making them pricier in other currencies.

Platinum and palladium dropped 1.8% and 3.2%, respectively.

At the New York spot close: gold edged down 20 cents to $2,304.50; silver dropped 64 cents to $29.13; platinum shed $17.80 to $958.90; and palladium retreated by $29.50 to $895 an ounce.