Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold had its biggest one-day gain in two weeks, climbing 0.7% to close just under $1,357, a two-week high, after soft inflation data eroded the dollar and boosted demand for alternative assets.

U.S. consumer prices were flat in July, with the Consumer Price Index posting its weakest reading since February. The so-called core CPI, removing volatile food and energy prices, edged up just 0.1%.

The dollar hit fell to a post-Brexit low, dropping 0.8% against major rivals, as traders saw the inflation data as another reason for the Fed to hold off raising interest rates. Low rates pressure the dollar because they are a disincentive to foreign exchange investment in search of higher yield. A weaker dollar supports gold and other commodities by making them less expensive in other currencies.

Gold's gains were capped, and the dollar's losses stemmed, after William Dudley of the New York Fed said a September rate hike is on the table, though dependent on "where the data falls" for inflation and other economic factors. Separately, Dennis Lockhart of the Atlanta Fed said the economy appears strong enough for at least one hike this year.

In a research note to investors, Credit Suisse said gold will average $1,475 in Q4 and rise above $1,500 in early 2017. Its bullish outlook is based on rising investment demand, ongoing economic uncertainty, and negative real interest rates in the world's major economies.

The other precious metals were also higher, with silver adding 0.1% while platinum and palladium rose 0.7% and 1.9%, respectively.

At the Comex close: December gold gained $9.40 to $1,356.90; September silver added 3 cents, to $19.87; October platinum climbed $7.80 to $1,124.10; and September palladium jumped $12.85 to $705.10 an ounce.