Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dropped 0.7%, closing at an eight-month low just under $1,227, after improving jobless data boosted risk appetite, reducing safe-haven demand.

The Dow and S&P 500 added 0.6% and 0.5%, respectively, closing at new record highs after first-time claims for unemployment benefits fell to a two-month low, boosting economic optimism. The positive jobless news trumped a fall-off in factory activity in the Fed's mid-Atlantic region this month, and reports that U.S. housing starts dropped in August.

Gold was also pressured by yesterday's Fed policy statement raising its forecast for interest rates to 1.375% from 1.125% by the end of next year. While the central bank reiterated its pledge to hold rates near zero for a "considerable time" after the end of quantitative easing in October, the higher forecast implies that rates will rise more steeply when the increases begin. Higher interest rates support a stronger dollar, weighing on gold and other commodities denominated in the currency for international trade by making them more expensive to foreign buyers.

The other precious metals fell harder than gold, with silver sliding 1.1% while platinum and palladium both lost 0.9%.

At the Comex close: December gold dropped $9 to $1,226.90; December silver 20 cents to $18.45; October platinum fell $12.70 to $1,349.50; and December palladium fell $7.40 to $831.40 an ounce.