Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained slightly to close above $1,152 as a strong rebound in the dollar nearly neutralized safe-haven demand from weaker U.S. economic data that may dim the outlook for a midyear rate increase by the Fed. The metal finished the week down 1% in the dollar wake of the dollar's historic rally.

Wholesale inflation fell in February for a fourth straight month, pulled down by weaker profit margins, the Labor Department reported today. The PPI dropped 0.6%, far short of the 0.3% rise forecast, after dropping 0.8% in January.

Consumer sentiment fell in March as lower and middle income families became less optimistic about the direction of the economy and their earning potential. Consumer spending comprises roughly 70% of U.S. GDP.

Stubbornly low inflation and weak economic data may argue against a June rate increase by the Fed when the central bankers meet next week. With the exception of nonfarm payrolls, which have added1.3 million jobs over the past four months, U.S. data has been falling well short of forecasts. According to the Bloomberg ECO U.S. Surprise Index, which measures government reports against forecasts, recent data has been the most disappointing since 2009

The dollar rebounded after yesterday's pullback, bouncing 1% higher against major rivals as hedge funds and speculators managers go to cash in anticipation of rising bond yields when the Fed finally raises rates. A stronger dollar pressures gold because it is denominated in the currency for international trade becomes more expensive to foreign buyers.

The dollar's attraction is largely driven by divergent monetary policy between the Fed and other global central banks, most of which are cheapening their currencies by cutting interest rates and, in Europe and Japan, actively printing money through quantitative easing. The Fed is expected to raise interest rates later this year.

The other precious metals were mixed. Silver slipped 0.1% on the day and 2% this week. Platinum finished nearly flat but lost 0.6% this week. Palladium added on the day 0.2% but lost 3.6% on the week.

At the Comex close: April gold edged up 50 cents to $1,152.40; May silver slipped 2 cents to $15.49; April platinum added 30 cents to $1,115.20; and June palladium gained $1.75 to $788.70 an ounce.