Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged up 0.1% to close near $1,814 after cooler consumer inflation pressured yields and the dollar, lifting alternative assets. The metal reached an intraday high near $1,825 before receding on a sharp rise in risk appetite.

The Consumer Price Index was unchanged July, dropping the 12-month inflation rate to 8.5%, down from a 41-year high of 9.1% in June. Tumbling gasoline prices drove the decrease. The core CPI, excluding food and energy, rose 0.3%.

Wall Street hailed the surprising data as evidence that peak inflation may have passed. The Dow and S&P 500 jumped 1.6% and 2.1%, respectively. High-flying tech stocks, typically more vulnerable to high inflation and interest rates, reacted the strongest. The tech-heavy Nasdaq surged 2.9%.

The dollar plunged 1.1% against major rivals as traders speculated that tamer inflation may make the Fed less inclined to raise interest rates so aggressively in September.

The odds of a 75-basis-point hike at the next Fed meeting fell from 70% before the CPI release to 43% after, according to CME FedWatch, while the odds of a 50-point hike increased from 32% to 56%.

The prospect of a smaller rate hike weighed on the dollar by making it less attractive to Forex investors seeking higher yield. A weaker dollar, in turn, supports gold and other commodities by making them less expensive overseas.

Benchmark 10-year Treasury yields also pulled back on the dovish rate view, buoying gold by decreasing the opportunity cost for holding it instead on bonds as a safe haven.

The other precious metals were also higher. Silver jumped 1.3% while platinum rose 1.4% and palladium 1.2%.

At the Comex close: December gold futures added $1.40, to $1,813.70; September silver climbed 26 cents to $20.74; October platinum picked up $13 to $946.10; and September palladium futures rose $27.10 to $2,245.90 an ounce.