Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained slightly to close at $1,257.50 despite a rising dollar and surging stocks as traders re-calibrated expectations for rate hikes following this week's Fed meeting. The metal ended the week 0.7% higher for its first weekly win in a month.

The Fed raised interest rates by a quarter-point this week, as expected. But the central bank surprised the markets by holding fast to its forecast of just three hikes in 2018, citing stubbornly low inflation. Given three quarters of GDP growth around 3%, many analysts were anticipating the announcement of an accelerated schedule of hikes for next year.

In a classic case of "sell the rumor," gold came under excessive price-pressure in recent weeks on speculation that the Fed would turn hawkish in its forecasts at the December meeting. This week, the metal rebounded as traders "bought the fact" that the Fed will maintain a slow and cautious approach to tightening next year.

Gold's gains came despite sharply higher stocks, with the Dow adding 0.6% and Nasdaq nearly 1.2% as the Republican tax plan moved closer to passage this week. Lower corporate and personal tax rates are expected to fuel growth and share prices next year.

The dollar picked up 0.2% on tax-reform optimism, capping gold's gains today. A falling dollar supports gold and other commodities priced in it for international trade by making them less expensive overseas.

The other precious metals were also higher for the week. Silver added 0.8% for a weekly rise of 1.5%. Platinum rose 0.9% today and 0.7% this week. Palladium dropped 1.3% today but still gained 1.9% this week.

At the Comex close: February gold added 40 cents, to $1,257.50; March silver gained 13 cents to $16.06; January platinum climbed $8.20 to $889.40; March palladium lost $13.30 to $1,015.40 an ounce.