Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.6% to close under $1,212 as the dollar extended its major rally, reducing demand for alternative stores of value. The metal fell 5.9% for the month, its biggest monthly loss since June 2013, and 8.3% in the third quarter.

The dollar closed its strongest quarter in six years, rising 7.7% over a record-breaking 11 straight weeks of gains, mainly because of expectations the Federal Reserve will begin to tighten interest rates well before the European Central Bank or Bank of Japan. The ICE Dollar Index, measuring the currency against a basket of rivals, is now at a four-year high.

The dollar strengthened today despite a round of weaker economic data. The Conference Board reported that consumer confidence fell sharply in September for the first decline in four months. Worries about the labor market, after the U.S. added just 142,000 jobs in August, weighed on consumers' outlook for continued economic growth. If the September jobs report, due on Friday, repeats the August weakness, it would likely weigh on the dollar and strengthen gold by reducing impetus for the Fed to raise rates. U.S. home prices fell short of forecasts in July, underscoring unevenness in the housing recovery, and the ISM-Chicago business barometer fell last month.

A rising dollar pressures gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies. The Bloomberg commodity index dropped 1.4% today and 6.2% in September, roughly in step with the dollar's rise this month. Silver fell 2.8% today to a four-year low, ending the quarter down 19%. Platinum slipped 0.7% today and lost 12% this quarter, and palladium dropped 2.3% on the day and nearly 9% on the quarter.

At the Comex close: December gold fell $7.20 to $1,211.60; December silver lost nearly 50 cents to $16.98; October platinum slipped $9.03 to $1,298.50; and December palladium dropped $18.08 to $768.10 an ounce.