Precious Metals Market Report by Bill Musgrave – American Gold Exchange
Gold slipped 0.3% to close under 1,160 as an uptick in the dollar diminished demand for alternative store of value.
The ICE Dollar Index rebounded by 0.3%, helped by a tumbling British pound after the Bank of England lowered its quarterly inflation forecast, pushing the prospect of any increase in interest rates further into the future. The dollar rose 0.9% against the pound and 0.4% against the euro, which has also been pressured by low inflation in the Eurozone. A rising dollar weighs on precious metals and other commodities denominated in the currency for international trade by making them more expensive for users of other currencies.
Subpar inflation is also raising concerns in the U.S., prompting two members of the Federal Reserve this week to advocate caution in raising U.S. interest rates. Boston Federal Reserve bank president Eric Rosengren said on Monday that the Fed should fight low inflation as vigorously as high inflation or risk the kind of disinflation that plagues Japan and is starting to hamper Europe.
Separately, Narayana Kocherlakota of the Minneapolis Fed said rate hikes anytime in 2015 would be inappropriate because of the Fed’s muted outlook for inflation. Expectation of rising rates have been a driver of the dollar’s recent rally, in turn weighing on the gold price.
The other metals were mostly lower, with silver dropping 0.4% and platinum falling 0.5% while outlier palladium edged up 0.1%
At the Comex close: December gold slipped $3.90 to $1,159.10; December silver dropped 6 cents to $15.62; January platinum lost $1.40 $1,205.30; and December palladium edged up 95 cents to $773.65 an ounce.