Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold close higher for the sixth straight session, edging up 0.1% to just over $1,275, as increasing violence in Iraq boosted flights to safety. Sunni militants seized a succession of cities in northern Iraq and reportedly executed up to 1,700 Iraqi soldiers over the weekend as that nation slides closer to full-scale sectarian war, jeopardizing Middle East oil production.

Gold rallied as high as $1,283 before stronger-than-expected U.S. economic data capped its gains. ">Manufacturing activity rose last month and factory production in the New York Fed region jumped in June, signaling the likelihood of stronger growth in the second quarter after contraction in the first. Homebuilder confidence surged in June to a one-year high, feeding optimism that the housing market may be stabilizing after a weak first half of the year.

On the negative side of the U.S. economic ledger, the IMF downgraded its forecast for U.S. growth this year from 2.8% to 2%, adding that persistently high unemployment will leave room for the Fed to maintain near-zero interest rates until 2017. Low interest rates are bullish for gold because they pressure the dollar and lower the opportunity cost for owning gold, which offers no yield. A weaker dollar supports higher prices for gold and other commodities denominated in the U.S. currency by making them less expensive for foreign buyers.

The other precious metals were mixed. Silver and platinum each gained 0.3% while palladium slipped 0.4% At the Comex close: August gold edged up $1.20 to $1,275.30; July silver rose 6 cents to $19.72; July platinum added $4.10, to $1,439.10; and September palladium slipped 3.25 to $809.35 an ounce.