Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold leapt 1.8% and briefly touched $1,400 as grim U.S. housing data cast new doubt on a September taper of quantitative easing by the Fed. Sales of new homes plunged 13.5% in July to the lowest level since last October. Far below forecasts, the reading suggested that rising mortgage rates may be snuffing out the incipient housing recovery, a crucial catalyst of economic growth. Separately, the ECRI index of growth measures fell to a four-week low.

Mortgage rates and long-term bond yields have risen sharply since May on expectations that the Fed may begin cutting its bond-buying program as early as September. Today's weakness in housing because of higher long-term borrowing costs was therefore seen as a disincentive for the Fed to cut back on QE, which is specifically intended to reduce borrow costs. Treasury yields fell and the dollar swung into losses upon release of the data, helping gold to a weekly gain of 1.9%. Silver rallied 3.1% on the day to its highest close since May and finished 1.8% higher for the week. Platinum added 0.1% and closed the week up by 0.9%. Palladium was the outlier, falling 0.6% today and 1.6% this week.

At the Comex close: December gold leapt $25 to $1,395.80; September silver surged 70 cents to $23.74; October platinum picked up $1.50 to $1,541.60; and September palladium slid $4.20 to $750.85 an ounce.