Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.7% to finish above $1,210, its highest close in seven sessions, as weak inflation and rising jobless numbers boosted the Fed's case for remaining patient about the timing of interest rate increases.

The Consumer Price Index tumbled 0.7% in January, its biggest one-month drop since 2008, on sharply lower gasoline prices. Consumer inflation over the past twelve months turned negative the first time since 2009, sliding to minus 0.1%. Core inflation excluding energy and food rose 0.2%, slightly more than forecast.

Low inflation was mentioned this week by Fed Chair Janet Yellen as a key reason for the central bank to exercise "patience" in determining when to raise interest rates. Her dovish statements on monetary policy before Congress this week led traders to speculate that rates will remain near zero for longer than expected, perhaps until September or later, boosting the gold price and weakening the dollar.

Other U.S. data was mixed, with durable goods orders rising for the first time in four months while jobless claims surged by 31,000 to 313,000. The dollar rallied 1% on the durable goods data, making today's strong showing by gold all the more impressive. A rising dollar typically pressures the price of gold and other commodities denominated in it for international trade by making them more expensive to holder of other currencies.

Gold's gains were further supported by solid demand returning in China's markets after the weeklong closure for the Lunar New Year. Net gold imports from Hong Kong rebounded strongly in January, climbing to 71.6 metric tons from 58.8 in December. China runs neck and neck with India as the world's largest gold consuming nation.

The other precious metals tracked gold higher. Silver rose 0.9% while platinum and palladium both picked up 0.4%.

At the Comex close: April gold gained $8.60 to $1,210.10; May silver rose 15 cents to $16.62; April platinum picked up $4.80, to $1,173.60; and June palladium added $1.75, to $811.05 an ounce.