Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.7% to close near $1,836 after a dovish Fed and disappointing economic data pressured the dollar, lifting alternative stores of value. It was the metal's highest finish since mid-June.

At the conclusion of its two-day meeting on monetary policy yesterday, the Federal Reserve signaled that while it had discussed reducing support for the economy, it decided the recovery still has "some ground to cover" before any changes to its massive stimulus program could begin.

Going into the meeting, most market participants were expecting the central bank to outline steps toward reducing quantitative easing from its present $120 billion per month, with the gradual taper likely to begin in September. The end of QE is a prerequisite for raising interest rates.

Instead, the Fed pushed the decision down the road, which means easy money policies will remain firmly in place despite a sharp rise in inflation over the past six months.

Supporting the Fed's caution, GDP for the second quarter came in below most forecasts. While the economy grew an impressive 6.5% in the spring, it fell well short of the annualized 8.5% rise anticipated by economists in a Reuters poll.

Separately, pending home sales fell 1.9% in June, suggesting that the crucial housing market is cooling after some strong quarters.

The dollar dropped 0.5% to the lowest level in a month on the dovish Fed stance and soft data. A weaker dollar supports gold and other commodities by making them cheap in other currencies, lifting demand overseas.

The other precious metals were also higher, with silver jumping 3.6% while platinum and palladium rose 0.9% and 0.8%, respectively.

At the Comex close: December gold gained $31.20 to $1,835.80; September silver jumped 91 cents to $25.78; October platinum rose $9.50 to $1,067.60; and September palladium added $20.50, to $2,643.10 an ounce.