Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold tumbled 1.6% to close under $1,294 after upbeat jobs data and rising wholesale inflation boosted the dollar, prompting traders to take profits from four days of gains.

US wholesale inflation surged in March, with the producer price index climbing 0.6% behind sharply higher energy costs. The data reinforced yesterday's CPI increase of 0.4%, also driven by jumps in gasoline and energy prices. Core wholesale inflation, factoring out energy and food, remained flat.

First-time jobless claims fell below 200,000 last week for the first time since 1969, providing further evidence that the labor market remains strong despite recent slowdowns in GDP and other growth indicators.

The dollar rose 0.3% against major rivals as the euro slid after ECB chief Mario Draghi signaled support for additional monetary stimulus for the flagging Eurozone economy, which is on the verge of recession. A rising dollar pressures gold and other commodities priced in it for global trade by making them more expensive overseas.

Also boosting the buck, speculation about the Fed's rate view appears to be shifting. The minutes from the Fed's March meeting, released late yesterday, indicated concern about slowing growth, trade conflicts with China, and Brexit chaos. Members stressed that future moves will be data-dependent, perhaps opening the door to a late-year rate cut. The possibility of lower rates weakened the dollar recently, lifting gold in turn.

After the robust inflation and employment numbers, however, the likelihood of lower interest rates has probably decreased. According to CME FedWatch, the odds of a rate cut in December, which had risen from 11% a month ago to 40% earlier this week, dropped to 36% today. The shift in outlook lent momentum to the dollar and encouraged gold traders to take profits after a four-session rally of 1.6% to $1,314 an ounce.

Easing Brexit tensions also cut into demand for safe havens after the EU granted an extension to Britain until late October to come up with a Brexit plan. Without the extension, Britain would have crashed out of the bloc next week with no trade agreements, damaging all the economies of all concerned.

The other precious metals were also lower, with silver falling 2.5% while platinum and palladium lost 1.5% and 2.2%, respectively.

At the Comex close: June gold dropped $20.60 to $1,293.30; May silver lost 38 cents to $14.87; July platinum fell $13.60 to $895.30; and June palladium shed $30.60 to $1,332.60 an ounce.