Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.7% to close below $1,326 on carryover from Friday's hawkish comments from a prominent Fed official, which caused traders to increase their bets on a September rate hike. After hours, however, the metal erased most of today's drop when another important Fed member made a strong case for keeping rates low, undercutting the odds of a rate increase this month.

On Friday, Eric Rosengren of the Boston Fed said that he supports "continuing to pursue a gradual normalization of monetary policy� in order to prevent asset markets from becoming too frothy. A voting member of the FOMC, Rosengren thinks leveraged markets like commercial real estate have "become too ebullient" and imbalanced from low rates. His comments rallied the dollar and pressured gold.

Pushing back against that hawkish stance, Federal Reserve Governor Lael Brainard warned today that the U.S. economy is at risk of falling into the low-growth, low inflation trap plaguing Europe and Japan. This danger "counsels prudence in the removal of monetary accommodation," she asserted. Also a voting Fed member, Brainard is considered the leading candidate for Treasure Secretary in a Clinton administration, so her words carry a lot of weight.

The odds of a September hike fell dramatically after Brainard's speech, with CME FedWatch registering just a 15% chance, down from 24% on Friday. Higher rates would pressure gold by boosting the dollar, making dollar-pegged commodities more expensive to users of other currencies.

The other precious metals also closed lower before getting a Brainard bounce. Silver dropped nearly 1.9% while platinum and palladium lost 2.3% and 3.5%, respectively. Each metal then cut its losses in half after hours on fading expectations of a September hike.

At the Comex close: December gold dropped $8.90 to $1,325.60; December silver fell 37 cents to $19; October platinum shed $24.60 to $1,042.90; and December palladium slid $22.75 to $656.70 an ounce.