Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% to close under $1,278 as equities and the dollar strengthened on brightening prospects for tax reform, undercutting demand for safe havens.

The Senate passed sweeping tax cuts early Saturday morning, advancing a top Republican priority along party lines. This bill needs to be reconciled with the House version before becoming law, which is expected to occur sometime this month.

The dollar was up 0.4% as traders speculated that the historic tax changes will stoke inflation, prompting the Fed to increase interest rates. A stronger dollar typically weighs on gold and other commodities priced in it for international trade by making them more expensive in other currencies.

The Dow and S&P 500 advanced to new records on tax expectations, picking up 0.6% and 0.3%, respectively. Retail stocks were especially exuberant as the sector will be a key beneficiary of the Senate's bill.

Gold was further pressured by falling oil prices as crude dropped 1.5% on the rising dollar and data showing an increase in the number of US oil rigs. More rigs will likely result in rising domestic production, undermining prices.

The other precious metals were also lower, with silver dipping 0.1% while platinum and palladium lost 1.6 % and 2.4%, respectively.

At the Comex close: February gold slid $4.60 to $1,277.70; March silver dipped 2 cents to $16.37; January platinum lost $14.60 to $926; March palladium dropped $24.50 to $991.75 an ounce.