Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.7% to close at a one-month low of $1,102 as a rise in the dollar and a rally in global stocks reduced demand for alternative stores of value.

Led by an 8% surge in Japanese stocks, global equity markets gained amid speculation about new stimulus in Asia after China's Finance Ministry announced a new fiscal measures to support growth, including additional infrastructure spending and tax reform. Similarly, Japan's Prime Minister promised a reduction in corporate taxes, signaling that additional easing measures may be forthcoming.

The dollar rose against major rivals as traders weighed the possibility of tighter monetary policy in the U.S. versus looser policies in other major economies. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

Adding to speculation that the Fed might raise interest rates when it meets next week, the Labor Department reported today that U.S. job openings hit a record high in July, signaling a tighter labor market.

A number of prominent economists are stepping forward to implore the Fed not to raise rates. Former Treasury Secretary Lawrence Summers, once the frontrunner to replace Ben Bernanke as Fed Chair, warned today that tightening in this environment "risks catastrophic error." Nobel laureate Joseph Stiglitz called it "a no-brainer" to delay a rate hike. And World Bank Chief Economist Kaushik Basu told the Financial Times that the Fed risks triggering "panic and turmoil" by raising rates in September.

The other precious metals tracked lower with gold, with silver falling 1.2% while platinum and palladium dropped 2.2% and 1.5%, respectively.

At the Comex close: December gold fell $19 to $1,102; December silver lost 18 cents to $14.58; October platinum dropped $21.70 to $981.20; and December palladium slid to $577.95 an ounce.