Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 2.1% to close at a four-week high of $1,202 as the dollar weakened again following yesterday's dovish statements from the Fed, boosting demand for alternative assets. It was gold's biggest one-session rise since mid-May.

Based on statements from the FOMC following this week's policy meeting, analysts are increasingly convinced that the Fed will refrain from raising interest rates until late this year, probably December. Futures traders put the probability of a December hike at 66%.

In her post-meeting press-conference, Yellen said the first hike will come only after the committee sees "further improvement in the labor market" and evidence that "inflation will move back to its 2% objective over the medium term." Furthermore, Yellen warned, rates will remain low for a long time after the initial increases.

The dollar fell against a basket of rivals, supporting gold and other commodities denominated in it for international trade. Meanwhile, U.S. and global equities jumped on the prospect of more cheap liquidity in the financial markets, with the Dow, S&P 500, and Global Dow all adding around 1%.

The Consumer Price Index rose 0.4% in May, the most in two years, on a surge in gasoline prices. However, the so-called core CPI, stripping out volatile food and energy costs, rose by merely 0.1%, its smallest increase since December. Core CPI is more important in the Fed's calculus for timing the first rate hike.

Gold found additional safe-haven demand from a further deterioration in Greece's prospects of avoiding default. EU finance ministers called for an emergency summit after this week's meeting ended with no agreement. Greece must agree to rigid austerity measures in order to qualify for additional bailout aid, without which it cannot pay its debts and may be forced from the Eurozone. An ECB official said today that Greek banks may be forced to close as early as next week.

The other precious metals were mostly higher, with silver and platinum rising 1.3% and 0.9%, respectively, while outlier palladium dipped 0.2%.

At the Comex close: August gold surged$25.20 to $1,202; July silver gained 21 cents to $16.15; July platinum rose $10.10 to $1,082.80; and September palladium dipped $1.70 to $718.65 an ounce.