Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold gained 0.3% to finish near $3,359 as Treasury yields and the dollar fell on growing confidence that the Fed will substantially reduce interest rates this year. Silver rose 1.6% to finish at $38.50 an ounce.

Yesterday's mild CPI print showed the annual inflation rate was unchanged at 2.7% in July despite higher tariffs. In addition, last week's nonfarm payrolls report showed the economy adding just 73,000 jobs last month, while the totals for June and May were revised downward by a whopping 258,000.

The combination of low inflation and a weakening labor market virtually guarantees that the Fed will cut rates by at least 25 basis points in September. It also ups the odds of additional easing later in the year. The likelihood of 75 basis points in cuts by December is now 57%, according to CME FedWatch, up from less than 50% a week ago

Benchmark 10-year Treasury yields receded under 4.3% on the rate view, boosting gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Tracking lower with yields, the dollar fell 0.3%, supporting gold and other commodities by making them less expensive in other currencies.

Platinum dipped 0.4% while palladium rose 0.5%.

At the New York spot close: gold gained $9.80 to $3,358.70; silver added 60 cents, to $38.50; platinum slipped $5.60 to $1,336.95; and palladium picked up $5.10 to $1,136.45 an ounce.