Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.2% to close near $1,222 as downbeat data and geopolitical tensions boosted demand for safe-haven assets. It then pushed above $1,225 in electronic trade after the minutes from the last Fed meeting showed uncertainty over future rate hikes.

U.S. factory orders fell 0.8% in May, more than expected, the Commerce Department reported today. Accounting for 12% of the economy, manufacturing has been faltering in recent months because of falling oil prices and declines in auto demand.

North Korea claimed a successful test of a missile capable of reaching Alaska, sharply increasing tensions with the rogue nation. Nikki Haley, US Ambassador to the UN, called the move "a clear and sharp military escalation."

The dollar initially rose on the saber-rattling, picking up 0.2% against major rivals alongside gold on flights to safety. The buck then surrendered those gains after the release of the recent Fed minutes showed growing divisions with the central bank on the pace of future interest rate hikes. An increasing number of members say they are "less comfortable" with the Fed's plan for three rate hikes per year, citing slower growth and weak inflation.

Gold pushed higher after hours because of the dovish Fed minutes as traders recalibrated their expectations for rising interest rates. Higher rates typically boost the dollar by attracting foreign exchange investment seeking higher yield, pressuring gold in turn by making it more expensive overseas.

In its latest market report, Bank of America Merrill Lynch projects gold at $1,400 by year end because of concerns over global growth and Fed rate policy.

The other precious metals were mixed, with silver and palladium dropping 1.2% and 1%, respectively, while platinum picked up 0.3%.

At the Comex close: August gold gained $2.50 to $1,221.70; September silver lost 20 cents $15.90; October platinum picked up $2.70, to $908.80; and September palladium dropped $8 to $834.40 an ounce.