Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 2.1% to close at a three-week high of $1,354 after another round of weak U.S. economic data all but dashed the chances of a September rate hike, slamming the dollar and boosting demand for safe-haven assets. Silver did even better, jumping 4% to $20.14.

The U.S. services sector tanked in August, the ISM reported today, expanding at just 51.4% for its slowest growth in six years. Including health care, retailing, and food service, this sector employs the majority of Americans and accounts for nearly 80% of GDP.

Coming on the heels of last week's disappointing data showing a dramatic slowdown in hiring and a contraction in manufacturing, today's release raises new questions about third-quarter growth and the economy's ability to withstand higher interest rates.

The dollar plunged 1% against major rivals as traders speculated that a September hike is probably off the table, with CME FedWatch dropping the odds to just 15%, down from 21% on Friday and nearly 30% early last week. Low rates pressure the dollar, supporting gold and other commodities denominated in it for international trade by making them less expensive overseas.

Stocks moved higher on the improved prospect for low rates, with the Dow picking up 02% and the Global Dow nearly 0.6%. Treasure bonds rallied to a two-week high as investors sought safety. The other precious metals also finished strongly higher, with platinum gaining 3.8% and palladium 4%.

At the Comex close; December gold surged $27.30 to $1,354; December silver jumped 77 cents to $20.14; October platinum climbed $40.50 to $1,102.70; and December palladium rose $27.10 to $700.65 an ounce.