Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 0.5% to close under $1,960 after weak trade data from China and credit rating downgrades in the US banking sector by Moody's raised growth worries, lifting the dollar and undercutting alternative assets. It was the metal's lowest finish in nearly a month.

China's imports and exports fell far more than expected in July, reflecting softer global demand for goods and ongoing weakness in its domestic demand. Imports dropped 12.4% year-over-year, while exports tumbled 14.5%.

Meanwhile, Moody's downgraded the creditworthiness of 10 midsize and small US banks and placed six banking giants on review for potential downgrades, including Bank of New York Mellon, US Bancorp, and State Street. The unusual moves rekindled fears about the health of the US banking sector following the abrupt failure of SVB and other banks last spring.

Growing concerns about global growth, combined with the banking downgrades, drove risk-off sentiment. The Dow and S&P 500 shed 0.5% each while the Nasdaq lost 0.8%. Benchmark 10-year Treasury yields receded to 4% and investors fled into the perceived safety of government debt.

Normally, falling yields and equities lift gold on safe-haven inflows. But today this support was overshadowed by a sharp rally in the dollar, which added 0.6% on flights to safety in the currency markets. A rising buck weighs on gold and other commodities by making them pricier overseas.

Gold's slide was also cushioned by a relatively dovish statement on interest rates from Philly Fed chief Patrick Harker. Speaking in Philadelphia, Harker said "we may be at the point where we can be patient and hold rates steady." But he added that he is "not thinking about cutting interest rates" yet.

The other precious metals were also lower, with silver sliding 1.8% while platinum and palladium lost 2.5% and 1.5%, respectively.

At the Comex close: December gold lost $10.10 to $1,959.90; September silver shed 42 cents to $22.81; October platinum dropped $22.70 to $904.20; and September palladium fell $18.10 to $1,218.10 an ounce.