Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.7% to close near $1,796 as the dollar pulled back ahead of tomorrow's Fed meeting, buoying alternative stores of value despite higher Treasury yields.

The dollar fell 0.2% against major rivals as Forex traders repositioned themselves ahead of tomorrow's meeting. Falling dollar lifts gold and other commodities by making them less expensive overseas.

For weeks, traders have been betting the Fed will start tapering stimulus with the goal of raising interest rates next summer. The buck rose 0.8%, the most in four months, on Friday after the Fed's preferred inflation gauge, the PCE, jumped to 4.4%. Today's retreat hedged against the possibility that the Fed may prove more dovish than expected.

Gold also received bids in its traditional role as inflation hedge after Friday's data.

With price and wage inflation running at the highest levels in nearly 30 years, the Federal Reserve meets tomorrow to plot a course for removing monetary stimulus. On one hand, policymakers want to move toward raising interest rates to control inflation; on the other hand, pulling away life support too quickly could trip up the recovery and exacerbate weakness in the labor market.

Capping gold's rise, benchmark 10-year Treasury yields edged slightly higher, increasing the opportunity cost for holding the metal instead of boards as a safe-haven asset.

The other precious metals were also higher, with silver rising 0.5% while platinum and palladium jumped 4.6% and 3.6%, respectively.

At the Comex close: December gained $11.90 to $1,795.80; December silver rose 12 cents to $24.07; January platinum climbed $46.60 to $1,067.30; and December palladium added $72, to $2,052.30 an ounce.