Gold Down on Tame Inflation

Gold prices and Inflation

Gold prices dropped $2 today in response to data showing in February that inflation was still under control; at least for now, and gold responded as expected with a slight drop in price.

On the Comex division of the New York Mercantile Exchange gold for April delivery dropped to $1,120.50 an ounce.

The U.S. dollar index predictably rose, gaining 0.04 percent to $79.70.

With or without the news though, this was sure to happen after large gains on Tuesday where gold prices surged by over $20 an ounce.

Europe and the euro continue to be important to gold, as over-optimistic reports could end up with the euro taking another hit, which would strengthen the dollar and put downward pressure on gold prices.

Even so, the sovereign debt crisis will probably help gold in the future, and that may override whatever strength the U.S. dollar maintains during that time.