Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 1.1% to close at a three-week low under $1,311 as fading North Korea fears and a rising dollar stoked equities, reducing demand for alternative assets.

Secretary of State Rex Tillerson calmed markets by asserting yesterday that the US is seeking a "peaceful solution" to the conflict with North Korea. The conciliatory statement comes after the rogue nation made another provocative test of an ICBM on Friday.

Wall Street rallied in relief, with all three main US indexes touching new highs, led by banking, tech, and industrial stocks.

The dollar rose 0.3% against major rivals and hit an eight-week high against the safe-haven yen as forex traders also responded to the apparent Korea de-escalation. A rising dollar pressures gold and other commodities priced in it by making them more expensive in other currencies.

The buck was further boosted by increasing expectations that last week's upbeat inflation data may nudge the Fed toward another interest rate this year. CME FedWatch now puts the odds of a December hike at 56%, up from 41% one week ago. Wholesale inflation rose 0.2% in August while consumer inflation added 0.4%.

In the nearer term, the Fed is widely expected to announce a small reduction in its $4.5 trillion balance sheet at the two-day meeting that starts tomorrow. It would be start towards unwinding the $3.7 trillion program of monetary stimulus accumulated in response to the monetary crisis of 2009 and ensuing recession.

The other precious metals were mostly lower, with silver and platinum losing 3.1% and 1.1%, respectively, while outlier palladium added 0.9%.

At the Comex close: December gold dropped $14.40 to $1,310.80; December silver lost 55 cents to $17.16; October platinum fell $10.70 to $961.10; and December palladium rose $8.70 to $930.45 an ounce.