Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3% to a three-week low, closing just over $1,297, as the dollar rallied after Fed Chair Janet Yellen said interest rates could rise more quickly than expected if unemployment continues dropping at an accelerated pace. The metal was also hit by follow-up technical weakness after yesterday's 2.3% following a mysterious $2.7 billion sell-order when Comex opened.

In prepared remarks before the Senate, Yellen remained generally quite dovish about monetary policy, asserting that "a high degree�of accommodation remains necessary" because "the recovery is not complete." Nonetheless, her suggestion that increases in the federal funds rate could begin "sooner than currently envisioned" if the labor market improves faster than anticipated, reduced demand for gold as an altertnative store of value. Treasurys fell for a second day alongside other safe havens.

The CBO issued a warning today that federal debt is forecast to rise to 106% of the economy, from its current 74%, in 25 years if spending on health benefits and Social Security is not contained. Calling the current path "unsustainable," the CBO report also pointed to rising interest payments on current debt as a factor in the escalating debt-to-GDP ratio.

The dollar gained against most rivals, especially the euro and yen, following Yellen's statement. A rising buck pressures gold and other precious metals denominated in the currency for international trade by making them more expensive to buyers overseas. Silver dipped around 0.1% while platinum and palladium fell 0.5% and 0.4%, respectively.

At the Comex close: August gold slipped $9.60 to $1,297.10; September silver dipped 3 cents to $20.89; October platinum lost $8 to $1,485; and September palladium dropped $3.45 to $868.55 an ounce.