Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold held almost all of yesterday's 1% gain, dipping 20 cents to close above $1,096, as surprisingly weak U.S. consumer confidence supported safe-haven buying despite rising equities and a stronger dollar.

Confidence among consumers fell by the most in four years in July, the Conference Board reported today, as Americans became significantly less optimistic about the labor market and more concerned about upheavals in the global economy, especially Greece and China. The latest reading was the lowest in 10 months. Adding to uncertainty, the S&P/Case Shiller index showed growth in home prices stalling in May.

The Fed will weigh the data as it meets this week to set monetary policy. While recent reports on job growth, retail sales, and some housing metrics have suggested a mild slowdown in the economy this quarter, most analysts still think the FOMC will raise interest rates by a fraction of a point sometime this year. Expectations of higher rates weigh on gold and other commodities by boosting the dollar, which makes them more expensive to foreign buyers.

Chinese stocks stabilized today after another major sell-off yesterday, boosting risk-appetite in the U.S. markets and pulling investment from safe havens. The Dow picked up 1% and the S&P 500 rose 1.2%. The dollar also crept higher ahead of this week's Fed meeting.

Global consultancy GFMS, a division of Thompson Reuter, reported today that global gold demand dropped 12% year-over-year in the second quarter. The main drag came from China, the world's largest gold buyer, where retail investment fell by 23% as China's stock markets soared. The recent plunge in Chinese shares has yet to translate into a rebound in demand for gold in China, but GFMS is cautiously optimistic that it may as prices stabilize.

The other precious metals were mixed, with silver and palladium adding 0.3% and 1.4%, respectively, while platinum slid 0.3%.

At the Comex close: August gold dipped 20 cents to $1,096.20; September silver added nearly 4 cents to $14.64; October platinum slid $2.50 to $986.40; and September palladium gained $8.50 to $621.60 an ounce.