Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.3% to close above $1,806 as the dollar declined on expectations that the Delta variant will push the Fed to postpone reductions in monetary stimulus. It was the metal's third day of gains and first close above $1,800 in two weeks.

IHS Markit's August surveys of the US services and manufacturing sectors revealed substantial declines as the Delta variant of the coronavirus damped activity and increased supply shortages. Service-oriented businesses fell to an eight-month low while manufacturers slid to a four-month low.

The soft data comes as cases and hospitalizations spike at home and abroad, threatening to derail the global recovery from last year's devastating pandemic closures.

Meanwhile, the Fed's annual symposium at Jackson Hole, which shifted from in-person to virtual in recent days because of health risks, is expected to signal the central bank's intention to delay its announcement of stimulus reduction. Just last month, sentiment among members suggested a taper beginning this fall. Now this timeframe is far from certain.

Dallas Fed President Robert Kaplan, a renowned monetary hawk and vocal proponent of reducing stimulus, surprised the market by saying he may rethink his position on an early taper of the bond-buying program known as quantitative easing, or QE.

Under current QE, the Fed buys $120 billion in government bonds each month to promote lending and spending by flooding the financial system with cheap cash. Tantamount to printing money, QE undermines and dollar and stokes inflation, both of which are supportive of higher gold prices.

The dollar fell 0.6% from a nine-month high on speculation that the Fed will shift back toward a more dovish stance. A falling dollar supports gold and other commodities priced in it for global trade by making the cheaper in other currencies.

Further supporting the metal, oil prices jumped sharply on bargain-hunting and reports of low national crude inventories. WTI crude added 5.3% to $65.40 per barrel. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also sharply higher, with silver jumping 2.4% while platinum and palladium rose 2% and 4.8%, respectively.

At the Comex close: December gold gained $22.30 to $1,806.30; September silver climbed 54 cents to $23.66; October platinum added $19.90, to $1,014.10; and September palladium jumped $108.60 climbed to $2,385.10 an ounce.