Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.5% to close under $1,090 as weak factory output in Europe weighed on the euro and boosted the dollar, reducing demand for alternative stores of value.

Eurozone PMI figures showed manufacturing in France fell into contraction in July and Greece plummeted to its weakest output on record. Spain, Germany and Holland also came in slower than expected.

U.S. factory activity also slipped in July, according to the latest ISM data, and consumer spending dipped, suggesting some of the economy's momentum may be slipping. Automakers reported stronger sales than expected, however.

The dollar gained despite the slightly downbeat U.S. data, supported by the weaker euro and ongoing speculation that the Fed may raise rates as soon as September. A rising dollar pressures gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

The July report on U.S. nonfarm payrolls, due Thursday, will be carefully monitored for further direction on the course of interest rates. Last week, the Fed said the first hike will come when it sees "some further improvement in the labor market," which most Fed-watchers interpret as more than 200,000 new jobs.

The other precious metals also fell, with silver losing 1.5% while platinum and palladium dropped 1.8% and 2.8%, respectively.

At the Comex close: December gold fell $5.70 to $1,089.40; September silver lost 22 cents to $14.52; October platinum dropped $17.90 to $967.10; September palladium surrendered down $17.35 to $603.50 an ounce.