Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% to close under $1,835 despite soft payrolls data and a pullback in yields and the dollar as traders continued to fret over the direction of interest rate policy. It was the metal’s eighth straight down session.

ADP reported that private payrolls added merely 89,000 jobs in September, far short of forecasts, suggesting some cooling of the stubbornly hot labor market. Almost all the job gains were in leisure and hospitality businesses such as restaurants, hotels, and travel. Employment fell in manufacturing and transportation.

The government’s nonfarm payrolls report, due Friday, will give a more reliable sense of employment trends.

The US services sector cooled somewhat last month, with the ISM index slipping to 53.6% from 54.5% in August, where anything over 50% signals growth. New orders fell to a nine-month low below 52%, however, suggesting a weaker outlook.

Benchmark 10-year Treasury yields pulled back under 4.75% on the softer data, stemming for now the massive selloff in bonds that has skyrocketed yields in recent weeks.

Tracking lower with yields, the dollar dropped 0.2% against major rivals, interrupting its recent rally to a one-year high.

While falling yields and a weaker dollar ordinarily support higher gold prices, the metal continues to feel the pressure of an overall resilient economy and aggressively hawkish rhetoric from the Fed. The major of central bankers are forecasting higher rates for longer, which weigh gold by increasing the opportunity cost for holding it.

Sharply lower oil prices also weighed on gold today. US benchmark WTI crude plunge 5.6% after US government data revealed gasoline stockpiles have risen by 6 million barrels, indicating slacker demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also lower. Silver dropped 1% while platinum fell 0.6% and palladium tumbled 1.8%.

At the Comex close: December gold fell $6.70 to $1,834.80; December silver slid 23 cents to $21.15; January platinum dropped 5.40 to $874.20; and December palladium shed $20.90 to $1,172 an ounce.