Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Extending yesterday's rise, gold gained another 0.4% to close near $1,352 as retreating equities and a softer dollar boosted demand for alternative assets. Palladium surged 4.6% to a 13-month high above $726.

U.S. stock indexes fell from record levels after tumbling oil prices hammered energy stocks, pulling the Dow and S&P 500 lower by 0.3% and 0.4%, respectively. Crude lost around 2% after reports that Saudi Arabia pumped record-high volumes in July, adding to worries about a global supply glut.

The dollar fell another 0.6% against major rivals, extending yesterday's decline, as weak U.S. productivity data continued to fuel speculation that the Fed will refrain from raising interest rates this year. CME FedWatch shows the likelihood of a December rate hike at 35%, down from as high as 45% earlier this week. Low U.S. rates weigh on the dollar, thereby supporting gold and other commodities priced in it for international trade.

The dollar was also pressured by falling foreign demand for Treasury bonds. The cost of hedging other currencies against the dollar, especially in Asia, has eaten into yield, making the U.S. debt less attractive to investors. Because Treasurys must be purchased in dollars, falling demand removes a source of support for the buck.

The other precious metals also finished higher, with silver and platinum gaining 1.6% and 2%, respectively. Palladium was the big winner, surging 4.6% after data showed Chinese auto sales rocketed 23% higher in July. The metal is widely used in auto manufacturing for catalytic converters.

At the Comex close: December gold gained $5.20 to $1,351.90; September silver jumped 32 cents to $20.17; October platinum climbed $23.20 to $1,183.10; and September palladium surged $32.05 to $726.40 an ounce.