Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.6% to close just under $1,095 as softer U.S. data clouded the outlook for higher interest rates, weighing on the dollar and boosting demand for alternative stores of value. Nonetheless, gold finished July more than 6% lower for its biggest monthly drop in two years.

The Employment Cost Index rose by merely 0.2% in the second quarter, the Labor Department said today, for the smallest quarterly increase in 33 years. The surprisingly weak report suggests ongoing slack in the labor markets is continuing to depress wages, which in turn is holding back consumer spending and inflation. The Fed has repeatedly pointed to subpar wage growth and inflation as reasons to be cautious about raising interest rates.

Consumer sentiment fell in July as Americans remain worried about the pace of economic growth. While GDP rose at 2.3% in the second quarter, well above the revised 0.6% growth in Q1, it nonetheless fell well short forecasts and virtually guarantees that annual growth will fail to achieve 3% growthfor the tenth straight year, the longest stretch since 1945.

The dollar retreated on the softer data as traders speculated that the Fed will be less inclined to raise rates in September. A falling dollar supports gold and other commodities denominated in it for international trade by making them less expensive to foreign buyers. Treasury bonds gained with gold on flights to safety.

The other precious metals were mixed, with silver rising 0.3% while platinum and palladium fell 0.5% and 1.6%, respectively.

At the Comex close: December gold gained $6.40 to $1,095.10; September silver added 5 cents, to $14.75; October platinum slid $4.90 to $985; and September palladium dropped $9.70 to $620.55 an ounce.