Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.4%, rising for a fourth straight session, as new signs of slowing in the U.S. economy increased expectations that the Federal Reserve will announce more monetary easing at their next meeting. Retail sales fell again in May, as high unemployment and falling wage gains are causing consumers to pull back for a second month. And the producer price index decreased by 1% as energy and food prices dropped. Equities and the dollar fell. Silver lost 0.3 % and palladium 0.2% while platinum rose 0.9%

At the close: August gold gained $5.60 to $1,619.40; July silver slipped 1 cent to 0.03% $28.94; July platinum added $12.40 to $1,466.80; and September palladium dropped 95 cents to $623.30 an ounce.

Slowing retail sales and lower wholesale pries are expected to increase pressure on the Fed to act in support of the slowing economy. In the past, the Fed has pointed to rising inflation as a reason not to undertake another round of easing. With consumer inflation flat and wholesale inflation dropping, that objection is losing its force. Consumer spending, which accounts for some 70% of the economy, was one of the main drivers of growth during the first quarter�but even then, the economy expanded only by 1.9%, well under the Fed's target of at least 2.5%. With manufacturing already down and employment stagnating, investors saw today's soft consumer spending report as one more sign that the recovery is sputtering. Whether the Fed will act remains to be seen but the odds are increasing. More easing is bullish for gold because it devalues the dollar and increases long-term inflation risk.