Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.5% to close above $1,220 as mixed but generally upbeat U.S. economic data rallied the dollar, reducing demand for alternative stores of value. While it finished 0.8% lower for the week, gold has gained more than 9% in February and 15% so far this year, marking its best yearly start since 1980.

U.S. GDP was revised up from 0.7% to 1% for Q4, suggesting last year's year-end slowdown was not as bad as initially thought. The modest improvement resulted, however, from a sizable stockpiling of inventories, something that could weight on growth during Q1 of this year.

Consumer spending picked up in January, rising 0.5% for its biggest gain since last March. Consumer sentiment was at a three-month low in February, however, according to the final reading of the University of Michigan Index.

Most important from the Fed's perspective, the 12-month inflation rate nearly doubled in January, rising to 1.3% from 0.7% in December. The gains came in the so-called PCE price index, the Fed's preferred measure. The central bank has repeatedly stressed its target threshold of 2% as a primary condition for normalizing monetary policy.

The dollar jumped 0.7% against major rivals as traders speculated that upward pressure on inflation may encourage the Fed to raise interest rates again soon, and perhaps several times. A stronger dollar pressures gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

On the other hand, Federal Reserve Governor Lael Brainard lowered expectations for future rates hikes today in a speech on monetary policy at the University of Chicago. With growth and inflation expectations well below targets in all major economies, the market forces hitting the U.S. over the past 18 months have been the equivalent of three quarter-point rate hikes already, Brainard said, and could result in a lower path of future hikes.

The other precious metals also finished lower for the day and week. Silver lost 3.2% today and 4.5% this week. Platinum and palladium dropped 1.3% and 0.3% today, respectively, and lost 3% this week.

At the Comex close: April gold fell $18.40 to $1,220.40; March silver dropped 48 cents to $14.69; April platinum lost $11.90 to $915.10; and March palladium slid $1.30 to $482.10 an ounce.