Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold inched down 0.1% to finish just under $1,117 after positive housing data boosted the dollar, diminishing demand for alternative stores of value. The metal was supported, however, by safe-haven inflows after China's stock market plunged 6%.

Construction starts for new single-family homes jumped to the highest level since 2007, the Commerce Department reported today. Although building permits fell 16%, the data nonetheless signaled ongoing health in the housing sector.

The dollar edged higher against major rivals on the upbeat data, which follows recent rebounds in retail sales and consumer sentiment to strengthen the case for an increase in interest rates from the Fed sometime this year, perhaps as early as next month. A rising dollar typically weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

Forex traders remain cautious, however, ahead of tomorrow's Consumer Price Index release, which could reinforce the Fed's reticence to tighten monetary policy if it comes in low. Wholesale inflation moderated in July, according to government data released on Friday. And last week's surprising devaluation of the yuan is expected to add to global deflationary pressure, something that concerns Fed and central bankers everywhere.

China's main stock indexes both tumbled more than 6% over worries that the devaluation signals deeper weakness to come in China's economy. U.S. and European were also pulled lower.

The other precious metals fell harder than gold. Silver led the way, dropping 3.3%, while platinum and palladium surrendered 0.7% and 2.7%, respectively.

At the Comex close: December gold dipped $1.50 to $1,116.90; September silver plunged 51 cents to $14.79; October platinum slid $6.60 to $994.10; and September palladium surrendered $16.80 to $597 an ounce.