Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending Friday's 0.5% rise, gold added another 0.7% to close near $1,741 as yields and the dollar pulled back ahead of tomorrow's CPI release. It was the metal's highest finish in two weeks.

The Consumer Price Index is expected to show annual inflation at 8.1% in August, down from 8.5% in July and 9.1% in June. Sharply lower gasoline and crude oil prices have been the primary reasons for reduced inflationary pressure.

Separately, the New York Fed reported consumer expectations for inflation fell again in August, with Americans now anticipating inflation at 5.75% over the next 12 months, down from 6.2% in July. It was the third straight month of declines.

Benchmark 10-year Treasury yields edged slightly lower but held about 3.5% as traders weighed the effect of falling inflation on the Fed's hawkish stance on interest rates. Lower rates help gold by decreasing the opportunity cost for holding it instead of bonds.

Over the past week, a chorus of Fed officials including Jerome Powell have repeatedly vowed aggressive action against inflation despite accompanying risks to economic growth. The market is pricing-in odds of more than 90% that the Fed will raise rates by another 75 basis points when it meets later this month.,

The dollar fell 0.6% against major rivals, especially the euro, after ECB officials said they are likely to raise interest rates to 2% this year despite the eurozone being on the brink of recession because of 9.1% inflation and Russia's war on Ukraine.

A weaker dollar lifts gold and other commodities by making them cheaper overseas.

The other precious metals were sharply higher, with silver jumping5.8% while platinum and palladium rose 3.1% and 4.5%, respectively.

At the Comex close: December gold gained $12 to $1,740.60; December silver surged $1.09 to $19.86; October platinum picked up $27.30 to $904.20; and December palladium rose $97 to $2,274.60 an ounce.