Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold finished the day virtually unchanged, dipping 10 cents after disappointing data on wholesale inflation and retail sales was offset by growing expectations that the Fed will raise interest rates in December. The metal finished 0.6% lower for the week.

The Producer Price Index fell 0.4% in October, marking four straight months of flat or falling wholesale inflation and tallying a record 1.6% decline over the past year. In a separate report, retail sales rose a scant 0.1%, less than expected, suggesting that economic growth in the fourth quarter is likely to fall short of forecasts.

Despite the soft data, the dollar gained 0.6% against major rivals as conviction grows that the Fed will begin tightening monetary policy in December. Higher interest rates would support the dollar by attracting inflows from traders and investors in search of higher yields, weighing in turn on gold and other commodities denominated in the currency for international trade.

Appearing to disregard the rising deflationary pressure, which will only increase with a stronger dollar, two more Fed officials have lined up behind a likely hike next month. Vice Chair Stanley Fisher said late yesterday that the economy has weathered the strong dollar and is likely to continue doing so. Cleveland Fed President Loretta Mester, a voting member of the FOMC next year, said today that the time for higher rates is "quickly approaching" and delays may court inflation.

The other precious metals were also lower for the day and week. Silver dipped 0.2% for a weekly loss of 3.3%. Platinum dropped 1.5% on the day and 8.1% on the week. Palladium plunged 3.5% today and 12% this week.

At the Comex close: December gold dipped 10 cents to $1,080.90; December silver slid 2 cents to $14.20; January platinum dropped $13.20 to $863.70; December palladium plunged $19.45 to $539.25 an ounce.