Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold finished a volatile session nearly flat, dipping 0.1% to close under $1,114, after early gains driven by weak manufacturing data were undercut by uncertainty about the Fed's direction on interest rates.

The ISM reported that U.S. manufacturing plunged nearly into contraction in August, posting its worst performance in more than two years because of the smothering effect of slowing global growth and a surging dollar on U.S. exports. The downbeat survey comes as little surprise after all five reporting Fed districts recently signaled weaker factory activity in September.

The Atlanta Fed slashed its forecast in half for real GDP growth in the third quarter, cutting it from 1.8% three days ago to a scant 0.9% today. Its GDPNow forecasting model is widely considered the most accurate gauge of U.S. growth.

Factories in China and the Eurozone are slowing even more. China's newest PMI shows contraction in September for the second straight month, while the Eurozone's PMI registered slight but slowing expansion. Policymakers in both regions are expected to supply additional stimulus through monetary easing.

The weaker global data complicates the Fed's decision about when to raise interest rates. At the September FOMC meeting, slower global growth and its deflationary fallout were cited as reasons to postpone a hike until later this year. The strengthening U.S. job market, as evident in yesterday's ADP report of 200,000 jobs added by private employers in September, was cited as a reason to hike soon. Tomorrow's nonfarm payrolls report could tip the scales if it prints a big number.

The other precious metals were mostly lower, with silver inching down one cent and platinum slipping 0.4% while outlier palladium, boosted by the Volkswagen diesel-emission scandal, jumped another 4.4%. Palladium is widely used in gasoline engines, whereas platinum is used in diesel.

At the Comex close: December gold dipped $1.50 to $1,113.70; December silver inched down a penny to $14.51; January platinum slid $3.90 to $905.20; and December palladium jumped $28.45 to $679.40 an ounce.