Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.7% to close under $1,146 after Fed Chair Janet Yellen said the economy is still on track for a rate increase in 2015, boosting the dollar and reducing demand for alternative assets. The metal finished the week with a gain of 0.6%.

In a speech late yesterday, Yellen was optimistic about the U.S. economy despite slower growth in Europe and Asia. She said the Fed is "reasonably confident" that inflation will return to 2% in coming years, and believes "it will likely be appropriate" to raise rates later this year. However, she also wants the labor market to "run hot" for a while, which means subsequent hikes are likely to be gradual.

The dollar strengthened against major rivals following Yellen's speech, pressuring gold and other commodities denominated in it for international tradeby making them more expensive to holders of other currencies. The Fed's inclination to tighten monetary policy stands in sharp contrast with other central banks like Norway and Taiwan, both of which cut interest rates this week, and the ECB, which recently signaled its intention to increase quantitative easing.

The Dow rallied more than 100 points, further crimping demand for safe-havens, after GDP for the second quarter was revised higher again. The Commerce Department said the economy expanded by 3.9% from April through June, rather than the 3.7% pace reported in August, pulled higher by consumer spending and construction. Third quarter growth is projected to be much weaker, however, with the Atlanta Fed's GDPNow model forecasting just 1.4% as of yesterday.

The other precious metals were mixed on the day and week. Silver closed 0.1% lower for a weekly loss of 0.3%. Platinum fell 0.5% today and 3.4% this week, while palladium gained 1.7% today and a whopping 9.3% this week. The PMGs diverged because of the Volkswagen emissions scandal, which has hammered demand for diesel autos. Platinum is more widely used in diesel engines whereas palladium is used in gasoline engines.

At the Comex close: December gold slipped $8.20 to $1,145.60; December silver dipped 2 cents to $15.11; October platinum dropped $4.70 to $951.10; and December palladium jumped $11.15, to $667.60 an ounce.