Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.2% to close at $1,975 after private payrolls increased by more than expected, lifting Treasury yields and the dollar while undercutting alternative stores of value.

ADP reported US private-sector employment surged by 324,000 in July, nearly double most forecasts. Most gains were in services industries like hospitality, travel, leisure, and dining. Manufacturing continued its slump, losing 36,000 jobs.

The monthly ADP data is not always a dependable harbinger of the more-authoritative nonfarm payrolls report, which will be released by the Labor Department on Friday. But it suggests that the US labor market remains extremely strong despite the Fed's best efforts to slow it down with aggressive interest rates.

Benchmark 10-year Treasury yields jumped to a nine-month high near 4.1% after the ADP print as traders speculated that the hot job market might encourage the Fed to continue raising interest rates. Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked higher with yields, adding 0.5% to reach a three-week high against major rivals. A rising dollar pressures gold by making it more expensive in other currencies.

The buck has now rallied 3% in less than three weeks, rising from a 15-month low on July 18, as the US economy shows resilience relative to other major nations despite higher interest rates. Despite this strong headwind, gold has risen 0.8% during the same stretch, revealing impressive underlying strength of demand.

The markets largely ignored a downgrade of the US credit rating by Fitch to AA+. The credit agency's rationale was "deterioration in standard of governance," referring to the debt-ceiling standoff in June that risked default.

The other precious metals were mixed, with silver and platinum losing 1.9% and 1.1%, respectively, while palladium picked up 0.4%.

At the Comex close: December gold dipped $3.80 to $1,975; September silver slid 45 cents to $23.87; October platinum dropped $10 to $930.40; and September palladium picked up $4.70 to $1,241.80 an ounce.