Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.7% to close at a one-month low under $1,230 after strong housing data caused the dollar to extend its rally, reducing demand for alternative stores of value.

U.S. new home sales notched their biggest jump in 24 years in April, surging 16.6% to their highest level in eight years, according to data released by the Commerce Department. Numbers for March and February were also revised higher.

The unexpected strength in the crucial housing sector offers further evidence that growth is rebounding in the second quarter after grinding to a virtual halt in Q1. It also gives the Fed more leeway to raise rates in the next few months, coming on the heels of last Wednesday's release of hawkish minutes from the Fed's April meeting

The dollar rallied further against major rivals, with the ICE Dollar Index reaching a two-month high, as traders speculate that higher interest rates are coming soon. The CME FedWatch tool places the odds of a June hike at 34%, up from 30% earlier this week and 20% one week ago. Rising rates strengthen the dollar by attracting forex investment in search of higher yields. A stronger dollar weighs on gold and other commodities by making them more expensive overseas.

The other precious metals also finished lower, with silver dropping 1% while platinum and palladium dropped 0.9% and 2.3%, respectively.

At the Comex close: June gold fell $22.30 to $1,229.20; July silver dropped 17 cents to $16.25; July platinum slid $8.90 to $1,004.20; and September palladium lost $12.55 to $538.80 an ounce.