Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold gained 0.2% to close near $2,467 as a weaker-expected PPI cemented rate-cut hopes, pressuring Treasury yields and the dollar while lifting alternative assets. Silver edged down 0.3% to finish at $27.82 an ounce.

The producer price index rose just 0.1% in July, half of most forecasts, knocking the 12-month wholesale inflation rate down to 2.2% from 2.7% in June. The cost of services led the way, falling the most in 18 months. The PPI is considered a leading indicator of inflation in the pipeline.

Tomorrows release of the consumer price index should give a better sense of current inflationary trends, while Thursdays retail sales data should provide a snapshot of the health of consumer spending. The CPI is expected to show a meager 0.2% increase in July.

Benchmark 10-year Treasury yields dropped under 3.9% as traders became more convinced that falling inflation will spur the Fed to cut interest rates in September, perhaps by 50 basis points. Lower yields buoy gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Tracking lower with yields the dollar dropped nearly 0.5% against major rivals on the dovish rate view. A weaker dollar helps gold by making it cheaper in other currencies, lifting demand overseas.

Platinum inched down less than 0.1% while palladium jumped 2.8%.

At the New York spot close: gold gained $.30 to $2,466.70; silver dipped a dime to $27.82; platinum lost 70 cents to $945.90; and palladium climbed $25.10 to $924.50 an ounce.