Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinConsolidating most gains from its two-day rally of 1.5%, gold edged down 0.1% but held near $1,752 after wholesale inflation data nudged yields and the dollar slightly higher, limiting demand for alternative assets.

The Producer Price index leapt 1% in July, far more than most forecasts, as higher wholesale prices for new autos, hotel rooms, and airfare responded to pent-up demand and sputtering supplies. Used car and wholesale food prices decrease substantially, however, offering some relief.

The unexpectedly high PPI print comes one day after the Consumer Price Index surprised to the downside, with prices rising 0.6% in July after a jump of nearly 1% in June.

Benchmark 10-year Treasury yields climbed back to 1.375%, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset. The dollar inched up 0.1% against major rivals, making gold slightly more expensive in other currencies.

The softening of consumer inflation propelled gold to a 1.3% rise on Wednesday by decreasing the likelihood that the Fed will begin tapering monetary stimulus in coming months. Higher yields tend to lift Treasury yields and the dollar at gold's expense.

Despite today's high PPI, most analysts believe price rebounds in most pandemic-affected sectors may be nearly complete, reducing pressure on the Fed to alter policy. Sustained inflation and low interest rates are bullish for gold in its tradition role as inflation hedge and alternative store of value.

The other precious metals were mixed, with platinum rising 0.2% while silver and p0alladium slid 1.6% and 0.3%, respectively.

At the Comex close: December gold dipped $1.50 to $1,751.80; September fell 37 cents $23.12; October platinum picked up $2.10 to $1,017.70; and September palladium dropped $8.90 to $2,623.90 an ounce.