Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 0.7% to close near $1,430 as modest spending data and soft inflation bolstered the case for lower rates from Fed. It was the metal's third straight winning session.

Consumer spending rose in June by the smallest amount in four months, the Commerce Department reported, adding 0.3% as trade wars and geopolitical uncertainty weigh on US spending habits. On the upside, personal incomes rose for a fifth month and savings increased.

With growth slowing, inflation remained tame in June as the Fed's preferred measure, the PCE index, edged up merely 0.1%. The year-over-year increase is 1.4%, well-under the Fed's 2% target. The Atlanta Fed lowered its estimate for second-quarter growth in inflation-adjusted GDP to just 1.3%.

The dollar remained virtually flat despite a plummeting UK pound as traders speculate that the soft data reinforces the chance of dovish forward guidance when the Fed concludes its two-day meeting tomorrow. The pound plunged to a 28-month low on growing fears that new PM Boris Johnson, who is aggressively pro-Brexit, will crash out the EU with no trade agreement.

With a quarter-point rate cut already priced in, the only real question is whether the Fed will signal additional cuts to follow. Lower US interest rates would weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. A weaker dollar supports gold and other commodities by making them less expensive overseas.

Gold was also supported by safe-haven demand after President Trump escalated his tweet attacks on China, accusing it of negotiating in bad faith as trade talks resumed. The S&P 500 and Nasdaq each fell by nearly 0.3%.

The other precious metals were mixed, with silver rising 0.7% while platinum and palladium fell 1.1% and 2.9%, respectively.

At the Comex close: August gold jumped $9.30 to $1,429.70; September silver rose 12 cents to $16.56; October platinum dropped $9.30 to $872.60; September palladium fell $44.70 to $1,509.10 an ounce.