Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained for a second session, edging up 0.2% to close near $1,237, as flat wholesale inflation reduced pressure on the Fed to raise interest rates and weighed on the dollar. Reports that China will supply $80 billion in broad-based monetary stimulus through its five biggest banks also supported the metal by raising inflation risk in the world's second-largest economy.

Falling food and energy prices kept U.S. producer prices flat in August, according to the Labor Department, falling short of forecasts and July's meager 0.1% rise. Released as the FOMCn begins its two-day September meeting, the data is expected to give the Fed additional leeway in its forward guidance for tightening monetary policy. Most economists expect the first rate increase to occur in mid-2015.

The World Gold Council reported today that China is projected to increase its gold reserves for the first time since 2009, following a trend within emerging economies to offset currency risk by holding proportionately more gold. Whereas China has the biggest foreign-exchange holdings in the world, merely 1.1% is held in gold, according to the most recent official figures. The U.S. and Germany, by contrast, maintain roughly 70% in the metal.

The dollar fell against most rivals in the wake of the August PPI data, supporting precious metals and other commodities denominated in it for international trade. Silver edged up slightly while platinum and palladium picked up 0.3% and 0.9%, respectively.

At the Comex close: December gold gained $1.60 to $1,236.70; December silver added a cent, to $18.66; October platinum rose $3.80 to $1,367.30; and December palladium picked up $7.30 to $844.20 an ounce.