Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.2% to close above $1,326 after falling import and export prices lowered inflation expectations, eroding the dollar and boosting demand for alternative assets.

U.S. import prices fell for the first time in six months, dropping 0.2% in August, while prices on exported goods fell 0.8%, further calling into question the progress of consumer inflation toward the Fed's target rate of 2%. Several Fed officials, including Fed Governors Lael Brainard and Daniel Tarullo, have stated in recent days that evidence of rising inflation is needed before they will advocate tightening monetary policy.

The dollar fell more than 0.3%, boosting gold and other dollar-pegged commodities, on speculation that the data all but dashes the prospect, already dim, for a rate hike from the Fed next week. Treasure yields also fell as prices rallied on flights to safety.

With the odds of a September rate hike from the Fed hovering at just 15%, next week's meeting of the Bank of Japan is likely to influence the direction of the dollar, and therefore gold, more than the FOMC meeting will. If the BOJ withholds addition monetary accommodation, the yen is likely to rally against the dollar, boosting gold, whereas inaction by the Fed is largely priced into the market already.

The other precious metals also finished higher, with silver and platinum adding 0.5% while palladium picked up 0.1%

At the Comex close: December gold gained $2.40 to $1,326.10; December silver added 9 cents, to $19.07; October platinum rose $4.90 to $1,040.90; and December palladium edged up 40 cents to $656.50 an ounce.