Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rebounded 0.8% to close above $1,960 after a key measure of inflation fell again in June, pressuring yields and the dollar. The metal still ended the week down 0.3%, weighed down by rising yields after US GDP came in stronger than expected in the second quarter.

The Personal Consumption Expenditures index, the Fed's preferred inflation gauge, rose by just 0.2% in June, slowing the inflation rate to 3% from 3.8% the month before. The core rate, excluding food and energy, also rose 0.2% to slow the annualized rate to 4.1%.

Separately, the US employment index, a broad measure of labor costs, slowed further in the second quarter. Wages rose 1%, dropping the 12-month rate fell to 4.6%. Slower wage growth helps to soften the outlook for future inflation.

Benchmark 10-year Treasury yields slipped back under 4% on hopes that the falling inflation figures will induce the Fed to end rate hikes sooner. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds.

Yields spiked up yesterday after the government reported GDP grew 2.4%, beating forecasts and leading traders to speculate that the Fed might hold interest rates higher for longer. Gold fell by 1.2% for its biggest daily drop in a month.

The dollar tracked lower with yields today, dropping 0.2% against major rivals. A falling dollar lifts gold and other commodities by making them cheaper overseas.

Gold's rise was capped by upbeat consumer data. Household spending rose 0.5% in June, suggesting solid momentum in the economy. And consumer sentiment rose to a 22-month high in July on falling inflation and a robust job market, according to the University of Michigan survey.

The other precious metals were mixed for the day and lower for the week. Silver picked up 0.5% for the day but fell 1.5% for the week. Platinum picked up 0.1% for the session but posted a weekly decline of 2.9%. Palladium added 0.2% but still lost 3.7% this week.

At the Comex close: December gold gained $14.70 to 1,960.40; September silver added 13 cents, to $24.50; October platinum lost $1.30 to 943.70; and September palladium edged up $3 to $1,239.60 an ounce.