Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.3% to close under $1,438 on mixed economic data as traders awaited the outcome of the Fed's meeting on monetary policy. The metal then slid under $1,425 in electronic trade after the central bank cut interest rates for the first time since 2008. The metal gained 1.7% in July for its third straight monthly rise.

As almost universally expected, the Fed cut interest rates by a quarter point and signaled its readiness to cut further if necessary. Alluding to slower global growth and the burgeoning trade war between the US and China, the Fed vowed to "monitor" economic developments and "act appropriately to sustain" the longest expansion in US history in its policy statement.

However, Fed Chair Jerome Powell complicated that message in his post-meeting press conference, calling the rate cut a "mid-cycle adjustment" that might not be repeated.

In a classic example of the adage, "buy the rumor, sell the fact," traders responded by taking profits from the metal's recent rally to new six-year highs. Based on Fed-funds futures trading, the market held out a 23% chance that the Fed would be more aggressive, opting for a half-point cut.

Gold's drop after the announcement reflected disappointment that the Fed did not signal the start of a new easing cycle. The fact that gold has held support above $1,420, however, signals solid underlying demand.

The dollar jumped 0.5% after the Fed's post-meeting statement on relief that a deeper cut was not enacted. In addition, two FOMC committee members dissented from the cut, suggesting slightly more hawkishness in the committee than anticipated.

Earlier in the day, new data had presented a mixed picture of the economy. Consumer confidence jumped to an 18-year high, fueled by low inflation and a strong labor market. ADP reported 156,000 jobs added in the private sector in July, in line with forecasts. But manufacturing fell again in Midwest to the lowest level in more than three years. Often considered a forward indicator of growth, factory activity has suffered because of trade conflicts and lower demand from overseas.

The other precious metals were mixed for the day and month. Silver fell 0.9% for the session but surged 7.3% in July. Platinum rose 0.7% today and 4.3% this month. And palladium rose 1% on the day but lost 0.7% on the month.

At the Comex close: December gold slipped $4 to $1,437.80; September silver dropped 15 cents to $16.41; October platinum rose $6.30 to $878.90; and September palladium picked up $15.30 to $1,524.40 an ounce.