Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.8% to close above $1,232 as rising risk appetite and a stronger dollar diminished demand for alternative assets.

The dollar bounced back after yesterday's losses against a basket of rivals, rising on nervousness about Greece's stalemate with the European Union and signals from several Fed members that they are increasingly open to raising interest rates, perhaps in June. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

Germany has appeared intractable about concessions on earlier bailout agreements, and Greek plans have received little support from other finance ministers. However, Greece's Finance Minister sought to calm nerves by telling EU officials that Greece plans to work within the existing bailout agreement and budgetary constraints if it receives $11 billion in bridge financing and leeway in reducing austerity. EU representatives meet tomorrow night to negotiate an agreement.

The reassurances helped to revived risk appetite and push U.S. and European equities higher, pulling money from precious metals. The Dow gained 0.8% while the Global Dow added half that much.

Vocal inflation hawk Jeffrey Lacker of the Richmond Fed said today that interest rates should rise in June because U.S. economic growth will soon lead to higher inflation. John Williams of the San Francisco Fed, often dovish, said "this process of normalization" of monetary policy is "getting closer and closer" but he would not commit to a June start. Nor would Kansas City's Esther George, who nonetheless suggested that the Fed should stand ready to head-off asset bubbles by raising rates.

The other precious metals tracked lower with gold. Silver lost 1.2% while platinum and palladium fell 1% and 1.8%, respectively.

At the Comex close: April gold fell $9.30 to $1,232.20; March silver lost to $16.87; April platinum dropped $13.10 to $1,207.30; and March palladium shed $13.95 to $765.70 an ounce.