Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold finished virtually flat, dipping 10 cents to $1,204, after consumer inflation rose by more than expected in April, boosting the dollar and pressuring demand for alternative assets. The metal closed the week 1.7% lower for its first weekly loss since the end of April.

Overall consumer prices rose 0.1% last month, the Labor Department reported, but the so-called core consumer price index, stripped of food and energy costs, jumped 0.3% for its biggest gain in more than two years. Driven mainly by rising healthcare and housing cost, the higher core CPI was encouraging to the Fed, which sees persistently low inflation as an impediment to normalizing interest rates.

Separately, Janet Yellen reiterated her view that the first rate hike is likely to come this year. Speaking to the Providence Chamber of Commerce in Rhode Island, the Fed Chair said the economy remains on track despite a weak first quarter, which she dismissed as largely a seasonal anomaly. She added that when subsequent rate hikes come, the pace "is likely to be gradual," however, because of the "various headwinds that are still restraining the economy." Normal interest rates�around 4%–are still years away, she said.

The dollar jumped after the CPI report as traders speculated on the timing of the first rate increase. The consensus after this week's release of the recent FOMC meeting minutes, which showed a growing disinclination among members to raise rates in June, pushed the first hike back as far as December. The new inflation data, along with Yellen's speech, could put a September hike back on the table.

The other precious metals were mixed for the day and week. Silver dropped 0.5% to close the week down 2.9%. Platinum slid 0.3% today and 1.8% this week. Outlier palladium picked up 1% but still finished the week 1.4% lower.

At the Comex close: June gold dipped 10 cents to $1,204; July silver fell 8 cents to $17.05; July platinum lost $3.70 to $1,148.60; and June palladium picked up $7.90 to $784 an ounce.