Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.3% to close just above $1,271, surrendering a portion of yesterday's 0.9% rise as the dollar gained for the sixth session of the past seven, stifling demand for alternative stores of value.

Measuring the dollar against a basket of major rivals, the ICE Dollar Index rebounded 0.3% behind another strong rise against the yen. The Japanese currency has been pressured by recent talk from BOJ officials promising deeper easing to forestall deflation. A rising dollar typically weighs on gold and other commodities denominated in it for international trade by making them cheaper overseas.

The buck was also supported by central bank jawboning on this side of the Pacific as three regional Fed officials voiced support for higher interest rates. Cleveland Fed President Loretta Mester called recent inflation data "encouraging" and said she does not want to wait too long to hike. Kansas City Fed President Esther George called rates too low for current economic conditions. And Eric Rosengren of the Boston Fed said "the Fed should be ready to gradually normalize rates" given better GDP forecasts.

These comments diverge somewhat from the consensus view of economists polled by Reuters, who see no rate hike until September because of weak inflation. The futures markets are even less sanguine, with CME Fedwatch forecasting no increase until December.

The World Gold Council published its Gold Demand Trends for the first quarter. Against a backdrop of negative interest rates and devalued currencies, global demand for the metal surged 21% to 1,290 tonnes, making Q1 the second-strongest quarter on record. Booming investor appetite drove the increase, according to the WGC, with inflows into bullion-backed ETFs reaching the second-highest level ever at nearly 364 tonnes.

The other precious metals also finished lower, with silver losing 1.3% while platinum and palladium gave up 1.1% and 1.9%, respectively.

At the Comex close: June gold slipped $4.30 to $1,271.20; July silver lost 22 cents to $17.10; July platinum dropped $12.10 to $1,054; and June palladium fell $11.40 to $596.65 an ounce.