Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slid for a second day, dropping 0.6% after stronger-than-expected U.S. retail sales data put a damper on expectations for another round of quantitative easing, or QE3, from the Fed. Retail sales rose 0.8% in July, more than doubling forecasts, for the largest monthly gain since February. Although consumers are unlikely maintain this pace without improvements in the job market, Morgan Stanley raised its estimate for third quarter growth in GDP from 1.7% to 1.9% based on the data. Traders think the Fed may use this unexpected improvement to wait and see about further easing. The dollar therefore turned slightly higher, pressuring the gold price. Silver finished virtually flat while platinum and palladium, which are more directly tied to economic growth because of their widespread use automobile catalytic converters, gained by 0.5% and 0.6%, respectively.

At the close: December gold slid $10.20 to $1,602.40; September silver lost less than 1 cent to $27.76; October platinum rose $6.30 to $1,399.10and September palladium added $3.70 to $578.40 an ounce.

New data shows Europe edging closer to its second recession in three years. GDP in the eurozone shrank by 0.2 % in the second quarter after posting no growth in the first quarter. While Germany, the region's strongest economy, grew at a paltry 0.3%, France barely avoided contraction and Finland, Germany's strongest ally in the battle for fiscal austerity, went 1% into the red. Greece's economy was the worst, contacting at a rate of 6.2% last quarter. Economists warn that Germany and France are unlikely to sustain their recent resilience in the face of the region's spreading sovereign debt crisis. The new GDP data caused investors to shift from euros into dollars and U.S. Treasurys, adding to pressure on the gold price.