Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.3% to close above $1,213 as downbeat U.S. economic data lowered expectations that the Fed will raise interest rates in June. The metal finished 0.8% higher for the week but surrendered 5% in February after January's 8% surge.

The economy slowed in the fourth quarter by more than previous thought, with GDP expanding at just 2.2% rather than the 2.6% pace estimated last month. U.S. consumer sentiment fell in February, according to the University of Michigan survey published today.

The main reason for slower growth was a widening trade deficit because of the stronger dollar, which makes U.S. goods more expensive overseas. Consumer spending was also revised down slightly, though remained robust at 4.2% growth.

Atlanta Fed President Dennis Lockhart said rates should be off the table until June at the earliest, and considered thereafter only as data improves. Separately, San Francisco's John Williams echoed Lockhart, telling the Wall Street Journal that the Fed could hike in June but may wish to wait longer. Rising rates would strengthen the dollar and pressure gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

New York Fed President William Dudley said the greater risk to the economy comes from raising too early rather than too late, which "argues for a more inertial approach to policy" until inflation and labor market pressure are evident. A permanent voting member of the FOMC, Dudley agreed with research published today by Goldman Sachs and Bank of America calling for a delay of at least six months beyond June before the first rate increase, followed by steeper increases thereafter.

The other precious metals were mixed on the day but higher for the week. Silver slid 0.5% for the day but gained 1.6% for the week. Platinum gained 1.1% today and 1.4% this week. Palladium rose 1% to finish the week 5% higher.

At the Comex close: April gold gained $3 to $1,213.10; March silver slid 5 cents to $16.54; April platinum picked up $12.90 to $1,187; and March palladium rose $7.75 to $818 an ounce.