Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold edged up 0.1% to close above $1,090 in regular trading as the dollar fell back, boosting demand for alternative stores of value. However, the metal gave up those gains in electronic trade, dropping as low as $1,087, and the dollar rebounded after an FOMC moderate suggested a September rate hike is likely.

Atlanta Fed President Dennis Lockhart told the Wall Street Journal today that the Fed will probably raise interest rates at their September meeting unless "a significant deterioration in the economic picture" occurs in the next six weeks. Lockhart is considered a moderate voice on the FOMC and typically votes with the consensus.

The dollar spike higher following the Fed member's statement as traders repositioned for a September hike. Higher interest rates boost the dollar by increasing the yield on dollar deposits, making it more attractive to savers and investors. A rising dollar in turn weighs on gold and other commodities denominated in it by making them more expensive to users of other currencies.

The Thomson Reuters/Core Commodity index fell to a 12-year low yesterday behind the stronger dollar and weakening demand from China, the world's biggest consumer of industrial raw materials. The other precious metals were mixed in today's trading, with silver closing 0.3% higher while platinum and palladium each fell 1%.

At the Comex close: December gold edged up $1.30 to 1,090.70; September silver added 4 cents, to $14.56; October platinum dropped $8.60 to $958.50; and September palladium slipped $4.60 to $598.60 an ounce.