Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.3% to close just under $1,295 as GDP rose more than expected in the second quarter and private payrolls added more than 200,000 jobs this month. The metal then recouped almost all of those losses in after-hours trade, bouncing back to $1,298 when the FOMC's policy statement signaled no hurry to raise interest rates.

After an abysmal first quarter, in which it lost more than 2%, the economy accelerated by 4% in the second quarter, according to data released today by the Commerce Department, for its fastest growth since last fall. The unexpected jump supports the idea that first-quarter weakness was an anomaly due to harsh weather.

Of growing concern is the role of shaky credit in the expansion. Surging sales of cars and trucks accounted for nearly 4% of all consumer spending this quarter, and many of these purchases were made through unregulated subprime loans, which have grown by 130% over the past five years in the auto sector. Furthermore, one-third of all U.S. adults are more than 180 days overdue on debt payments, according to a report released today by the non-profit Urban Institute.

Gold received some support from the statement released by the Fed after this week's meeting. While admitting that the economy is showing signs of improvement, the central bankers emphasized the "significant underutilization of labor resources." Traders took this dovish statement to mean rates will remain near zero until well into next year. The dollar shed some gains against major rivals following the Fed statement.

The other precious metals were mixed on the day. Silver edged up by a cent and palladium gained 0.2% while platinum fell back 0.2%.

At the Comex close: August gold dipped $3.40 to $1,294.90; September silver added a cent to $20.60; October platinum slid $2.60 to $1,481.90; and September palladium gained $1.85 to $880.15 an ounce.