Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold slid 1.6% to close below $2,317 as positive PMI data lifted Treasury yields and the dollar, undercutting alternative stores of value. The metal dipped 0.6% for the week. Silver fell 3.8% to $29.57 but still managed a weekly rise of 0.6%.

The SandP flash index of service-sector purchasing managers rose in June to a 26-month high of 55.1, while the flash manufacturing PMI climbed to a three-month high of 51.7. Any reading above 50 indicates expansion. New orders rose slightly, and employment increased for the first time in three months. Nearly 70% of Americans are employed in service industries.

Perhaps more important to the Fed as it charts the course of monetary policy, the rate at which companies raise their prices declined to the lowest level in four years.

After a succession of weak economic data in recent weeks, the pair of influential PMI reports showed welcome resilience in the US economy in June without causing concern about rekindled inflation.

Separately, the index of leading US economic indicators fell another 0.5% in May, but does not signal recession, according to the Conference Board.

Benchmark 10-year Treasury yields recovered from early-session losses on the upbeat PMI data, pressuring gold by increasing the opportunity cost for holding it instead of bonds for safety.

The dollar gained 0.2% against major rivals while hitting an eight-week high against the yen on expectations that US rate cuts will lag its peers. A stronger buck weighs on gold and other commodities by making them pricier overseas.

After hitting new all-time highs above $2,400 in May, gold has stalled in June as the Fed, responding to higher inflation during Q1, became more cautious about reversing interest rates. But bullish momentum is widely expected to resume in the second half of the year on safe-haven demand, aggressive buying by central banks, and lower interest rates in major economies.

In a note to clients yesterday, JP Morgan Chase forecasts an 8% to 10% rise in the gold price during the Q3 and Q4, with a targeted high of $2,600 an ounce in 2025. Silver is projected at $34 an ounce next year.

Platinum rose 1.2% for a weekly increase of 3.9%. Palladium advanced 1.4% today and 2.2% this week.

At the New York spot close: gold slid $37.40 to $2,316.40; silver dropped $1.20 to $29.57; platinum added, $12.10, to $996.40; and palladium picked up $12.70 to $918.10 an ounce.