Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.1% to close at $1,423 on expectations of easier monetary policy from the Federal Reserve and the European Central Bank. Silver gained for the eighth time in nine sessions, adding 0.6% to finish at $16.57.

When it meets next week, the Fed is almost universally expected to cut interest by at least a quarter-point because of weak US data and slowing global growth. Odds of a more aggressive, half-point cut are 25%, according to CME FedWatch's monitoring of Fed-fund futures.

Similarly, when it meets tomorrow, the ECB is widely expected to respond to slowing Eurozone growth by either cutting interest rates on the euro of laying the groundwork for a cut in September. Many analysts expect ECB chief Mario Draghi to signal the return of quantitative easing, an asset-buying program designed to infuse the financial system with cheap money to stimulate growth.

Lower interest rates and monetary easing tend to devalue a nation's currency, building demand for alternative stores of value to offset the loss of purchasing power. Gold and silver are frequently used to hedge against such currency risk.

Manufacturing weakened in the US and the Eurozone in July, supporting the case for dovish monetary policies in both economies. Germany's flash PMI plunged to the lowest level in 7 years, according to HIS Markit, with new orders, employment, and inventories all tumbling in Europe's industrial engine.

At home, manufacturing output contracted in Q1 and Q2 of this year, the first back-to-back quarterly declines in nearly four years. While comprising around 10% of GDP, manufacturing is widely considered the leading forward indicator of economic health. Cyclical in nature, the sector is highly responsive to changes in the outlook for trade, business investment, and corporate profits.

The other precious metals were also higher, with platinum and palladium gaining 2% and 1.2%, respectively.

At the Comex close: August gold rose $1.30 to $1,423; September silver added 10 cents, to $16.58; October platinum gained $17 to $878.60; and September palladium picked up $17.80 to$1,536.40 an ounce.