Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.7% to close just above $1,106 after robust ISM services data and hawkish comments from Janet Yellen boosted the dollar, diminishing demand for alternative stores of value.

The ISM reported today that growth in the U.S. services sector topped expectations in October, with the index rising above 59, where 50 indicates expansion. With the ISM manufacturing index dropping to just above 50 last month, the 9 point gap between services and manufacturing is the largest in 14 years. Manufacturing has been hurt primarily by the strong dollar and slower global growth, whereas services activity pertains primarily to domestic demand.

Testifying before the House Financial Services Committee, Fed Chair Janet Yellen reiterated that a rate hike in December remains possible. In her first public comments since last week's Fed meeting, she said the economy is close to meeting the Fed's goals, growing "at a pace sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term." She emphasized, however, that the Fed would take a gradual approach to further tightening.

The dollar rallied strongly on the ISM data and Yellen statements as traders position themselves for a possible December hike. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to foreign buyers.

The other precious metals also finished lower, with silver dropping 1.1% while platinum and palladium lost 0.8% and 2.7%, respectively.

At the Comex close: December gold slid $7.90 to se $1,106.20; December silver dropped 18 cents to $15.06; January platinum shed $7.50 to $954.70; and December palladium lost $17.65 to $626.53 an ounce.