Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 2.1% to close under $1,757 after a spate of upbeat economic data lifted the dollar and Treasury yields, triggering a technical selloff resulting in the metal's biggest one-day decline in nearly six weeks.

US retail sales jumped 0.7% in August, far more than expected, in another sign that the economy is recovering despite the aggressive spread of the Delta variant. Most forecasts pointed to a decline of around 0.7% for the month. Retail sales are now 15% higher than one year ago.

The Philly Fed factory index surged more than 12 points in August to nearly 31, following four months of declines. The reading comes one day after the Empire State index posted an even stronger recovery to more than 34, where any reading over zero indicates expansion.

The strong data shifted the market view on whether the Fed may announce a taper of quantitative easing when it meets on monetary policy next week. After the surprisingly weak nonfarm payrolls report showed just 225,000 jobs were added by the economy in August, many economists were expecting the Fed to push its taper announcement off until November. Now, a September announcement is squarely back on the table.

The dollar rose 0.5% to a three-week high on the changing taper view, pressuring gold by making it more expensive in other currencies. Tapering QE buys the dollar by bringing the Fed closer to tightening monetary policy by raising interest rates, which makes the buck more attractive to Forex traders seeking higher yield.

Benchmark 10-year Treasury yields also rose, increasing the opportunity cost for holding gold instead of bonds as a safe-haven asset. Once the gold price began to slide, automatic stop-loss sales were triggering, propelling the meal lower in a bout of technical selling.

The other precious metals were mostly lower, with silver and platinum falling 4.2% and 0.8%, respectively, while palladium picked up 1.5%.

At the Comex close: December gold dropped $38.10 to $1,756.70; December silver shed $1.01 to $22.79; October platinum slid $7.20 to $923.30; and December palladium rose $29.90 to $2,021.50 an ounce.