Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid another 0.7% to close under $1,879 despite minor retreats in yields and the dollar as solid GDP and jobless data reinforced the the Fed's hawkish rate view. It was the metal's fourth straight lower session.

The economy grew 2.1% in the second quarter, according to the Commerce Department's revised figures, although consumer spending was weaker than initially reported. Household spending rose 0.8%, far lower than earlier 1.7% print. GDP growth for the third quarter is projected to be even stronger at 4%.

Buried in the GDP report were two new PCE indexes, both indicating that disinflation is continuing. A new PCE index excluding food, energy, and housing slowed to 3% in Q2 from 4.1% in Q1. And a new services index without housing and energy fell to 3.5% from 5.1%.

The traditional PCE index reports, due out tomorrow, will give Fed officials a better sense of where inflation is trending and whether further rate increases are needed.

First-time unemployment claims rose 2,000 to 204,000 last week, suggesting that layoffs are minimal, and the labor market remains strong.

Despite the positive GDP and jobless data, benchmark 10-year Treasury yield ticked down slightly but remained around 16-year highs. The dollar also pulled back 0.5% as traders took profits from its recent rally to a 10-month high.

Further pressuring the gold price, US benchmark WTI crude dropped 2% to under $92 per barrel on interest rate worries. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were higher, with silver edging up less than 0.1% while platinum and palladium climbed 2.1% and 4.5%, respectively.

At the Comex close: December gold lost $12.80 to $1,878.60; December silver added 2 cents, to $22.74; January platinum picked up $18.80 to $915.10; and December palladium picked up $54.80 to $1,278.50 and ounce.