Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold jumped 0.8% to close at a two-week high above $1,227 as disappointing U.S. economic data weakened the dollar and boosted demand for alternative stores of value. Notching its biggest one-day climb in five weeks, the metal finished the week with a 1.5% gain.

The Consumer Price Index was unchanged in June, the Bureau of Labor Statistics reported today, and the annualized rate of inflation dropped to 1.6%, well-below the Fed's target of 2%. Following yesterday's PPI report showing a meager 0.1% in wholesale inflation, little price pressure is currently in the pipeline.

In a separate report, retail sales fell 0.2% last month, marking the second straight month of declines. Sales have risen only 2.8% over the past 12 months, nearly a 50% falloff from the beginning of the year.

The Atlanta Fed cut its forecast for real GDP growth to just 2.4% in the second quarter because of the poor retailing data and other weak signals in the economy. The New Yorkk Fed cuts its forecast to just 1.9%.

The dollar tumbled on the disappointing data, losing 0.7% against major rivals to hit a 10-month low, as traders speculated that the Fed will be less likely to hike interest rates again this year. A falling dollar supports gold and other commodities priced in it by making them less expensive overseas.

The other precious metals also gained for the day and week. Silver climbed 1.5% for a weekly rise of 3.7%. Platinum added 1.8% today and 2.5% this week. Palladium picked up 0.2% on the day and 3.1% on the week.

At the Comex close: August gold jumped $10.20 to $1,227.50; September silver climbed 24 cents to $15.93; October platinum rose $16.40 to $923.50; and September palladium added $2, to $856.75 an ounce.