Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched down 60 cents to close just under $1,200 on momentum from Friday's upbeat jobs report supporting the view that the Fed will hike interest rates twice more this year.

The US added 201,000 jobs in August and wages grew at the highest annualized rate since 2009, according to the government's nonfarm payrolls report released last week. Along with solid growth in GDP and recent data showing inflation rising to meet Fed targets, the upbeat news boosted speculation that the Federal Reserve will raise interest rates at its September meeting and again in December.

Higher rates typically weigh on gold by supporting the dollar, which makes dollar-denominated commodities more expensive overseas.

Adding to the hawkish rate speculation, Boston Fed President Eric Rosenberg dismissed the idea that the flattened yield curve is an early warning of a weakening economy. With short-term interest rates nearing long-term rates, the yield curve has become a hot topic among economists because its inversion has generally prefigured recession. St Louis Fed President James Bullard, anticipating that the curve may invert early next year, suggested last week that Fed rate policy is already too tight, and loosening may be needed instead of more hikes.

Underpinning gold, the dollar lost 0.2% against major rivals led by the UK pound, which rallied sharply after the European Union's chief Brexit negotiator said an agreement may occur within the next eight weeks. The pound floundered in recent weeks as investors feared Brexit without an agreement would disrupt financial and trade relations in Europe.

The other precious metals were mixed, with silver and platinum adding 0.1% and 1.2%, respectively, while palladium lost 0.4%.

At the Comex close: December gold dipped 60 cents to $1,199.80; December silver added a cent, to $14.18; October platinum gained $9.60 to $790; and December palladium dropped $4.20 to $964.60 an ounce.