Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Breaking a two-day winning streak, gold slipped 0.5% to close at $1,072 as the dollar rebounded in anticipation of a rate hike from the Fed next week.

The U.S. Dollar Index added nearly 0.6% after two straight losing sessions as traders shifted out of the euro. Earlier this week, falling oil prices triggered a sell-off in commodity linked currencies like the Canadian dollar and Norwegian krone and a concomitant rally in the euro, spurred by the ECB's decision late last week not to deepen its program of quantitative easing.

With the Fed expected to raise interest rate next week for the first time in nine years, sentiment is ebbing ebbed back toward the dollar despite further erosion in the oil price to under $37 per barrel. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive overseas.

The dollar also shook off another round of weaker U.S. economic data. Growth is expected to be revised down from 2.1% to 1.9% in the third quarter because of softer-than-expected spending on services and software. U.S. import and export prices fell again last month by 0.4% and 0.6%, respectively, adding to concern about weak inflation. And jobless claims surged to a five-month high last week. The weak data is not expected to deter the Fed, although it may help to retard the pace of future hikes.

The other precious metals were also lower, with silver dropping 0.6% while platinum and palladium lost 1.1% and 1.8%, respectively.

At the Comex close: February gold slipped $4.50 to $1,072; March silver dropped 8 cents to $14.11; January platinum dropped $9.90 to $855.90; and March palladium lost $10.10 to $542.25 an ounce.