Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.6% to close at $1,318 on rising risk appetite after a slew of negative U.S. economic data all but killed the chances of a September rate hike when the Fed meets next week.

Retail sales declined 0.3% in August, the Commerce Department reported today, signaling softer domestic demand for goods and causing the Atlanta Fed to cut its GDP forecast for Q3 to 3%. Industrial output also weakened, dropping 0.4% in August and 1.1% over the past 12 months. Manufacturing has been hammered by falling oil prices, the strong dollar, and tepid demand for U.S. exports.

Wholesale inflation was unchanged in August after food prices fell by the most in three years. The sub-index for services edged up 0.1% while goods declined by 0.4%. The PPI has now been flat for the past 12 months, bedeviling the Fed's efforts to kindle inflation through near-zero interest rates.

The Dow and S&P 500 both gained 1%, pulling monies from safe-havens like gold and Treasury bonds, as traders speculated that the latest barrage of weak data means no rate hike when the FOMC meets next week. CME Fed Watch cut the odds for September from 15% to 12%, while December dropped to 50/50.

The other precious metals were mostly lower, with silver and platinum sliding 0.1% and 0.7% while palladium edged up slightly.

At the Comex close: December gold dropped $8.10 to $1,318; December silver dipped nearly 3 cents, to $19.04; October platinum fell $7.10 to $1,033.80; and December palladium inched up 10 cents to $656.60 an ounce.