Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.6% to close under $1,415 as upbeat US economic data tempered expectations for an aggressive rate cut from the Fed and the ECB held rates unchanged, disappointing traders betting on easier monetary policy.

Orders for durable goods rose 2% in June, beating forecasts, as demand increased for cars, computers, networking equipment, and other long-lasting manufactured products. The upbeat news came after downbeat data earlier this week showed US manufacturing contracted for the second consecutive quarter, stifled by slowing global growth and the trade war with China.

Jobless claims fell to a three-month low last week, underscoring persistent strength in the labor market despite slowing growth in Q2. The Atlanta Fed lowered its real GDP growth forecast to 1.3% for the period March through June.

The European Central Bank left interest rates unchanged but signaled the likelihood of future rate cuts and the possibility of a return to quantitative easing. Many analysts were expecting a rate cut of 10 basis points, so the non-move buoyed the euro and dulled demand for alternative stores of value in Europe.

The dollar perked up slightly against major rivals, adding around 0.1% as traders reassessed the probability of a half-point reduction in interest rates when the Fed meets next week. CME FedWatch cut the odds to 19% from nearly 24% yesterday on the improved data. The market puts the odds of at least a quarter-point cut at 100%.

Lower interest rates tend to undermine a nation's currency by making it less attractive to foreign exchange investors seeking higher yield. A falling dollar supports gold and other commodities priced in it for global trade by making them less expensive overseas.

The other precious metals were also lower, with silver sliding 1.3% while platinum and palladium lost 0.8% and 0.3%, respectively.

At the Comex close: August gold dropped $8.90 to $1,414.70; September silver lost 22 cents to $16.41; October platinum slid $7.10 to $874; and September palladium lost $4.60 to $1,533.90 an ounce.