Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.1% for its biggest one-day drop in a month as upbeat U.S. and eurozone economic data rallied the dollar and decreased the metal's safe-have appeal. Markit's flash PMI for U.S. manufacturing rose in July to a four-month high behind increases in new orders and employment. New home sales surged to a five-year high in June, signaling an expansion in residential construction. And eurozone manufacturing rose for the first time in two years, spurring hopes that the region may finally emerge from recession.

The dollar strengthened and 10-year Treasury yields jumped to a two-week high as traders considered the upbeat data's potential to nudge the FOMC toward slowing its bond-buying program, known as quantitative easing, when it meets next week. A rising dollar weighs on the gold price because gold is denominated in dollars internationally, making it more expensive to holders of other currencies. QE drives higher gold prices because it devalues the dollar and increases the risk of long-term inflation, building demand for gold as an alternative store of value.

Profit-taking also pulled money from gold as traders cashed in on its 10% gains over the past two weeks. The other metals were mixed, with silver losing 1.2% while platinum and palladium both rose 0.8%.

At the Comex close: August gold fell $15 to $1,319.70; September silver lost 23 cents to $20.02; October platinum gained $12.10 to $1,455.20; and September palladium picked up $5.85 to $745.30 an ounce.