Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 2.1% to close under $1,267 as the dollar strengthened behind hawkish comments from a prominent Fed official and dovish comments from central bankers in Europe and Japan.

The dollar extended Friday's rally, adding another 0.3% against major rivals, after the Bank of Japan and the European Central Bank signaled the likelihood of further interventions to weaken their currencies. Both nations have been struggling with deflationary pressures and weak economic growth.

By contrast, a key official of the U.S. Federal Reserve intimated that interest rates may rise twice this year even though recent economic data has been weak and GDP growth in the first quarter was virtually nil. New York Fed President William Dudley, considered a close ally of Fed Chair Janet Yellen, said Friday that two rate hikes are probably in order this year despite a surpassingly weak payrolls report, released the same day, showing job-gains at a seven-month low in April.

The possibility of divergent monetary policies, with the U.S. leaning toward tightening and other major currencies leaning toward further accommodation, provides support for the dollar by attracting forex investment in search of higher yield. In turn, a stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive overseas.

The other precious metals fell harder, with silver dropping 2.5% while platinum and palladium surrendered 3.5% and 3.8%, respectively.

At the Comex close: June gold lost $27.40 to $1,266.60; July silver dropped 44 cents to $17.09; July platinum slid $38.30 to $1,046.80; June palladium surrendered $23.10 to $584.10 an ounce.