Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Extending its slide to two sessions, gold fell 1.4% to close under $1,275 as the dollar gained on upbeat U.S. data and hawkish comments about interest rates from a prominent Fed official.

The U.S. services sector grew last month, with new orders and rising employment suggesting GDP may rebound in the second quarter after near-stagnation in the first. The ISM non-manufacturing index rose to 55.7, with any reading over 50 signaling expansion, as most industries expressed greater optimism about economic conditions.

The dollar rose against major rivals for a second day, with the ICE Dollar Index adding nearly 0.3%, as trader speculated that the better day may encourage to Fed to raise interest rate within the next few months. A stronger dollar weighs on gold and other commodities by making them more expensive to users of other currencies.

Atlanta Fed President Dennis Lockhart added fuel to rate speculation by saying today that a June hike remains "a real option", depending on interim data. While not a voting member of the FOMC, Lockhart is considered an influential moderate who frequently reflects the majority view.

The futures market disagrees with Lockhart, however, as the CME FedWatch tool calculates the odds of a June hike at merely 13%.

The other precious metals also fell, with silver dropping 1.1% while platinum and palladium slid 1.2% and 1.6%, respectively.

At the Comex close: June gold fell $17.40 to $1,274.40; July silver lost 19 cents to $17.30; July platinum shed $13.10 to $1,058.50; and June palladium dumped $9.95 to $598.90 an ounce.