Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 1% to close at a three-week low under $1,320 as equities and the dollar extended their rallies, eroding demand for alternative assets. Silver dropped 2% to close at $19.61.

The Dow and S&P 500 set new record highs, led by upbeat corporate earnings from bellwether tech and financial firms like Microsoft and Morgan Stanley. The dollar rose to a four-month high against major rivals as likely easing by other central banks contrasts with growing speculation that the Fed may raise interest rates before the year is out.

The Bank of Japan recently indicated that a new, aggressive round of quantitative easing is on the way. The European Central Bank has also suggested that it is leaning toward deeper easing, although no change is expected at the ECB meeting this week.

Meanwhile, improving U.S. data on job-creation, retail spending, and new home construction has raised expectations for a 2016 rate increase, boosting the buck against its weakening global peers.

CME Fedwatch now places the odds of a December hike at 42%, up from less than 20% in late June. Higher rates boost the dollar by drawing forex investment from overseas; a stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to foreign buyers.

The other precious were mixed, with platinum dropping 1.5% while palladium added 0.9%.

At the Comex close: August gold fell $13 to $1,319.30; September silver lost 39 cents to $19.613; October platinum slid $16.40 to $1,082.20; and September palladium rose $6.15 to $662.55 an ounce.