Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slid 1.2% to settle at $1,373 as upbeat U.S. economic data reinforced expectations that the Fed will reduce stimulus this month. The ISM services index rose above 58% with retail, construction, and education companies expanding in July at the fastest rate since 2005. ADP reported private-sector payrolls rose by 176,000 in August, down from July but in-line with modest growth. And first-time claims for unemployment benefits dropped to a five-year low last week. The dollar gained on the data, pressuring gold and other commodities that are denominated in dollars internationally. Silver fell 0.7% while platinum and palladium lost 0,8 and 1.6%, respectively.

At the Comex close: December gold slid $17 to $1,373.00; December silver lost 16 cents to $23.25; October platinum dropped $12.60 to $1,482.10; and December palladium fell $11.05 to $687.20 an ounce.

While the odds of a September taper seem to have increased, it is by no means a done deal. Minneapolis Fed President Narayana Kocherlakota says the Fed should be increasing stimulus, not decreasing it, based on the central bank's own targets. Speaking at the University of Wisconsin yesterday, he insisted that the Fed �is failing to provide sufficient stimulus to the economy,� as inflation remains below the target of 2% and employment is growing only slowly. His remarks came one day after San Francisco Fed President John Williams said the taper should start by year-end if the data support it.

Gold shipments to China from Hong Kong rose again in July behind strong demand for physical bullion. Mainland Chinese bought 129 tons of gold, up from 113 the month before and 70% more than the same month last year. Overall gold consumption is expected to rise by nearly 30% in China this year, reaching 1,000 tons.