Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.6% to close at $1.296.50, its highest finish in more than two weeks, as traders digested yesterday's release of minutes from the Fed's September meeting. The metal reached as high as $1,299.80 in intraday trade before retreating slightly on upbeat US data.

The minutes from the last Fed meeting showed members generally supportive of tighter monetary policy but increasingly concerned about persistently low inflation. Several members said they would like to see core inflation rising to the Fed's 2% target before agreeing to another rate hike.

Further comments from several Fed members have deepened the debate. Esther George of the Kansas City Fed said today that waiting for 2% inflation risks "overheating the economy" and flirting with "an undesirable increase in inflation." James Bullard of the St. Louis Fed, on the other hand, said the Fed must defend its 2% target before raising rates or lose credibility. Similarly, Chicago Fed President Charles Evans said yesterday that another hike is "not a done deal" while inflation is below 2%.

While the markets view a December hike as almost certain, the dovish tone to the Fed minutes and vocal opposition to another hike by some Fed members is giving traders pause, and lending support to gold. Higher rates tend to lift the dollar by attracting foreign exchange investment seeking higher yield. A stronger dollar, in turn, weighs on gold and other commodities priced in it for global trade by making them more expensive overseas.

The dollar added 0.2% against major rivals, limiting gold's rise, after wholesale inflation rose 0.4% in September, boosted by a hurricane-related spike in gasoline prices. The core PPI was softer at 0.2%.

The other precious metals also finished higher, with silver rising 0.8% while platinum and palladium climbed 0.9% and 1.5%, respectively.

At the Comex close: December gold gained $7.60 to $1,296.50; December silver rose 13 cents to $17.27; January platinum picked up $8.60, to $941.80; and December palladium climbed $14.75 to $973.70 an ounce.