Daily Gold Update

Source:Matt Warden, American Gold Exchange

AustinWith the announcement of a 0.25% rate hike widely expected from the FOMC on Wednesday this week, the gold price was kept in check at a more than 5-month low, trimming 0.2% off Friday's close to just under $1246 per ounce. The debut of Bitcoin futures contracts, along with record high closes in the Dow and S&P 500, helped keep the precious metals markets quite today.

According to the CME's FedWatch Tool, there is an 85% chance that the Federal Reserve will raise rates one more time in 2017, taking the federal funds rate up another 0.25% to 1.5%. The expectation of higher rates has provided support to the US dollar by attracting forex money seeking yield. A stronger dollar, in turn, weighs on gold and commodities priced in it for global trade by making them more expensive in other currencies. The US dollar rose 0.07% on the ICE US Dollar Index, maintaining pressure on the gold price.

The Cboe Global Markets introduced Bitcoin futures contracts late Sunday night, with backers arguing it will confer greater legitimacy to the cryptocurrency and reduce its volatility over time. Trading was thin, with only 3,930 one-month contracts having traded as of mid-afternoon today, but news coverage was heavy following Bitcoin's dramatic gains this year.

The Dow and S&P 500 closed at fresh all-time highs ahead of this week's FOMC announcement, driven by hope for congressional reconciliation of the tax bill and carry-over from last week's stronger-than-expected jobs report. The S&P 500 is closing in on its longest streak ever without a 5% decline, the low volatility containing tail-risk demand for precious metals.

The other precious metals were mixed today: platinum picked-up 0.6% and palladium edged higher by 0.2%, while silver moved 0.4% lower.

At the Comex close: February gold slipped $2.80 to $1,245.60; March silver lost 7 cents, to $15.75; January platinum rose $5.40 to $889.10; and March palladium added $1.95 to $998.35 an ounce.