Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 1.1% to close near $1,845 after strong retail sales data stoked expectations of higher interest rates, rallying the dollar and pressuring alternative stores of value. It was the metal's lowest finish in nearly six weeks.

After two straight months of falling, US retail sales jumped 3% in January, the biggest rise in almost two years. New vehicles surged 5.9% and restaurants soared 7.9% but almost every category showed strength. Retail sales is often seen as a weathervane for the overall economy.

Separately, confidence among US home builders rose this month to the highest level in five months, according to the National Association of Home Builders, suggesting that the recent skid in the housing market may be reaching an end.

Following this week's hotter-than-expect CPI and last week's blowout jobs report, the upbeat sales and housing data fueled bets that the Fed may raise interest rates more aggressively in March. The Fed funds futures markets now put the odds of a half-point hike at 12%, up from under 9% a day ago. The terminal rate is now seen as between 5% and 5.25%, up from under 5% last week.

The dollar surged on the prospect of higher interest rates, adding almost 0.7% to reach the highest level in six weeks. A stronger buck weighs on gold and other commodities by making them more expensive in other currencies.

Also pressuring the metal, benchmark 10-year Treasury yields pushed back above 3.8%. Higher yields hurt gold by increasing the opportunity cost for holding the non-yielding asset instead of bonds as a safe haven.

The other precious metals were also lower. Silver lost 1.4%; platinum fell 2.3%; and palladium shed 1.5%.

At the Comex close: April gold dropped $20.10 to $1,845.30; March silver lost 30 cents to $21.57; April platinum fell $21.40 to $917.80; and March palladium slid $21.70 to $1,444.50 an ounce.