Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged another 2.2% to close at a five-week high above $1,153 as mixed U.S. data and worries about global growth drove a sell-off in stocks, boosting demand for safe havens. On pace for its second straight weekly rise, the metal has rebounded more than 6% since late July, when it hit a five-year low near $1,077.

Equity indexes fell in a broad-based rout as skittish investors, fretting about slower growth in China and rising global deflation, shifted away from risk assets. The Dow plunged 358 points, more than 2%, while the NASDAQ lost 2.8% and the Global Dow 1.75%. U.S. Treasurys rallied on safe-haven inflows, pushing yields to the lowest levels in more than five months.

Another round of mixed U.S. data help to fuel the risk aversion. Jobless claims rose for the fourth straight week. The Conference Board's Leading Economic Index dropped in July after rising for four months, signaling a downshift in momentum for business cycles. And just a few days after the New York Fed region reported falling to recession-levels for factory output, the Philadelphia Fed region reported a slight uptick in business conditions last month, although new orders fell.

On the unequivocally positive side, U.S. home sales rose to a new post-recession high in July.

Gold's rally was also fueled by yesterday's dovish minutes from the last Fed meeting, in which many members viewed inflation as being too low to warrant a rate hike. This view was coincidentally reinforced by the release of CPI data showing that the pace of consumer inflation slowed in July. China's slowing economy was also cited as a risk to U.S. growth.

The dollar retreated again as traders speculate that a September rate hike is increasingly unlikely. A falling dollar supports gold and other commodities by making them less expensive overseas.

The other precious metals were mixed for the day and week. Silver slid 1.4% today but gained 0.6% this week. Platinum slid 0.8% but notched a 3.3% weekly gain. Palladium fell 3% today and 2.1% this week.

At the Comex close: December gold gained $6.40 to $1,159.60; September silver fell 22 cents to $15.30; October platinum lost $7.80 to $1,027.10; and September palladium dropped $18.80 to $604.50 an ounce.