Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% to close at $1,339 after an agreement to raise the US debt ceiling erased losses by the dollar and traders took profits from the metal's three-day rise of 2.3%. The metal spent much of the session with slight gains before rolling back.

In a rare display of bipartisanship, Congressional leaders and President Trump agreed to a three-month increase in the nation's debt limit and government funding, preventing for now a damaging shutdown of government and default on US debt obligations.

The news immediately lifted the dollar from intrasession losses and boosted long-term Treasury yields as the imminent risk of a credit-damaging US default receded. Stocks bounced higher, too, with the Dow and S&P 500 adding 0.4%.

Some upbeat US data also boosted risk appetite and pressured gold. The ISM non-manufacturing index rose in August, rebounding to 55.3% from July's 53.9%, which was the lowest in a year. Any reading over 50% signals expansion. The Fed's Beige Book reported "modest to moderate" growth across the 12 Fed regions while noting muted inflation.

Meanwhile, the Atlanta Fed's forecast for real GPD growth in Q3 dropped from 3.2% to 2.9% because of projected declines in real consumer spending and exports.

Gold's losses were backstopped by expectations that wobbly economic data and persistently low inflation may prevent the Fed from raising interest rates again this year. Last week, the Fed's preferred metric of inflation, the PCE index, fell to 1.4%, well under the target 2%.

Yesterday, Fed Governor Lael Brainerd urged caution before another hike because of low inflation. And separately, Neil Kashkari of the Minneapolis Fed said rate hikes "may have harmed" the economy over the past 18 months.

Hedge funds and other large money managers are increasingly bullish on gold. Net-long positions have risen nine-fold since late July, according to Bloomberg, with concerns about North Korea's militarism and US political turmoil being the main drivers.

The other precious metals also fell, with silver slipping 0.2% while platinum and palladium lost 0.2% and 2.6%, respectively.

At the Comex close: December gold slipped $5.50 to $1,339; December silver lost 3 cents to $17.91; October platinum dipped $1.90 to $1,007.10; and December palladium fell $25.10 to $931.90 an ounce.