Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.6% but held above $1,300 as service industries in the U.S. expanded by the most in five months, brightening prospects for economic growth in the second half of the year. The ISM non-manufacturing index surged from a three-year low in June to a five-month high in July, far exceeding forecasts, as construction companies, financial firms, retailers, and other services posted increased business activity.

Following last week's jump in the ISM manufacturing index to a two-year high, the upbeat data increased expectations that the Fed may begin to taper quantitative easing in September despite Friday's lackluster non-farms payrolls report. Dallas Fed President Richard Fisher, a renowned inflation hawk, said today that the taper should begin next month "unless we see some disturbing data." However, other Fed officials including Ben Bernanke have said they wish to see greater improvements in the labor market before reducing stimulus. QE supports higher gold prices because it undermines the value of the dollar and increases the risk of long-term inflation, spurring demand for gold as an alternative store of value. The other precious metals were mixed, with silver and platinum dropping 1% and 0.2%, respectively, while palladium added 0.8%

At the Comex close: December good fell $8.10 to $1,302.40; September silver for lost 19 cents to $19.72; October platinum slipped $3.40 to 1,448.10; and September palladium added $5.50, to $735.20 an ounce.