Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.5% to close above $2,009 after Friday's cooling inflation data increased optimism that the Fed may be done raising interest rates. The metal rallied 2.1% in July, scoring its best month since March behind the shifting rate view and a weaker dollar.

The Fed's preferred measure of inflation, the Personal Consumption Expenditures index, increased by a scant 0.2% in June, slowing the 12-month rate from 3.8% to 3%. In addition, labor costs softened in Q2 for the second straight quarter, easing the outlook for future inflation.

Fed fund futures traders now project a 60% likelihood that the Fed is done raising interest rates this year. What's more, the odds of a rate cut in January edged up slightly to 24%.

Benchmark 10-year Treasury yields pulled back slightly on the shifting rate view, buoying gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Also supporting gold prices, oil surged to a fresh three-month high and notched their biggest monthly increase in 17 months on production cuts by Saudi Arabia and the prospect of higher demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Capping gold's rise, the dollar picked up 0.2% after the Fed's Senior Loan Officer Survey showed banks have tightened lending standards in response to rising rates, recession concerns, and the recent failure of several regional banks.

But the buck fell 0.8% for the month, lifting gold and other commodities by making them cheaper overseas.

The other precious metals were also higher for the day and month. Silver jumped 2% for a monthly rise of 8.5%. Platinum added 1.6% for the day and 5% for the month. Palladium picked up 2.9% for a monthly bump of 4.4%.

At the Comex close: December gold rose $9.30 to $2,009.20; September silver surged 48 cents to $24.97; October platinum picked up $14.90 to $958.60; and September palladium climbed $36 to $1,275.60 an ounce.