Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.6% to close near $1,935 as the dollar rose ahead of tomorrow's CPI release, pressuring alternative stores of value. It was the metal's lowest finish in three weeks.

The consumer price index for August is widely expected to show inflation rising by 0.6%, the biggest increase in 14 months. The headline annual rate is expected to climb from 3.2% in July to 3.6% in August. But the Fed is not expected to be alarmed at this apparent jump. Why not? Because almost all of it comes from oil. Crude has surged nearly 25% since July.

So-called core inflation, factoring out volatile food and energy costs, is projected to have risen just 0.2% for the month, well in line with the recent trend towards softer inflation. The annual core rate is expected to fall from 4.7% in July to 4.3% in August, a 22-month low.

Benchmark 10-year Treasury yields edged slightly lower as traders anticipate that the Fed will respond more to the core rate than the headline number, keeping interest rates unchanged when it meets next week on monetary policy.

The dollar gained 0.4% as the yen retreated after Japan's Hiroshige Seko, a prominent lawmaker, said his preference is to keep monetary policies ultra-loose. The statement contradicted BOJ Governor Kazuo Ueda's indication yesterday that negative interest rates could end this year. A stronger dollar pressures gold by making it pricier overseas.

The other precious metals were higher, with silver rising 0.1% while platinum and palladium picked up 1.2% and 2.1%, respectively.

At the Comex close: December gold lost $12.10 to 1,935.10; December silver added 2 cents, to $23.40; October platinum rose $10.50 to $912.80; and December palladium advanced $26.10 to $1,245.30 an ounce.