Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.6% to close at a three-month low near $1,160 as the surging dollar continued to pressure commodities and undermine demand for alternative stores of value.

The dollar rallied to a 12-year high against the euro and an 8-year high against the yen as looser monetary policies in the Eurozone and Japan contrast with expectations the Fed will raise interest rates midyear. Last Friday's stronger-than-expected nonfarm payrolls report signaled better health in U.S. labor markets, an important factor in Fed Chair Janet Yellen's decision about when to lift rates from near zero, where they've been since 2008.

The ECB, on the other hand, is embarking on trillion-euro program of Fed-style quantitative easing that will undermine the euro and flood the Eurozone with liquidity. Japan has been easing for most of the past year, and other major economies like China and Canada are also loosening monetary policies to stimulate growth.

Speculation about interest rates rattled the markets and hammered U.S stocks, driving the Dow and S&P 500 lower by more than 1.7% and wiping out gains for the year. The stock market has been a primary beneficiary of the Fed's easy money policy as investors pursue higher risk and returns.

The rapidly rising dollar is projected to erode corporate profits by making U.S. products less competitive overseas. Jason Furman, Chair of the White House Council of Economic Advisors, said today that the strong dollar is creating headwinds for the economy.

Gold's losses were limited by safe-haven inflows from plummeting equities, which also boosted U.S Treasury prices. And ongoing worries about Greece's ability to meet the conditions of its bailout extension from the ECB, EU, and IMF also supported the metal.

The other precious metals fell harder than gold, with silver dropping 0.9% while platinum and palladium lost 1.6% and 2.3%, respectively. Oil dropped 2.7%.

At the Comex close: April gold slipped $6.40 to $1,160.10; May silver dropped 14.3 cents to $15.633; April platinum fell $18.60 to $1,130; and June palladium lost $18.85 to $804.10 an ounce.