Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.6% to close under $1,712 after upbeat ISM data fueled increases in bond yields and the dollar, undercutting alternative stores of value.

The Institute for Supply Management services-sector index rose to 56.9% in August, the highest level in four months, signaling growth in non-manufacturing companies like hotels, restaurants, and healthcare providers.

With the services sector comprising around two-thirds of GDP, the data helped to allay fears that the US economy is slowing toward a recession.

A competing services survey told a very different story, however.

The S&P Global Services US PMI fell to 43.7 in August, the lowest in two years, indicating contraction in this crucial sector and suggesting recession remains a risk.

Economists attributed the disparity between the surveys to the S&P PMI reflecting weakness in the real estate and housing markets because of much higher mortgage rates. When a substantial gap arises between these surveys, the ISM data typically trend toward the S&P in ensuing surveys.

Nonetheless, benchmark 10-year Treasury yields jumped on the expectation that apparent resilience in the economy and stubbornly high inflation will embolden the Fed to continue its recent campaign of aggressive monetary tightening. Higher yields pressure gold by increasing the opportunity cost for holding the non-yielding asset.

The dollar also forged higher on the hawkish rate view, adding another 0.6% against major rivals to reach a fresh 20-year high. Dollar strength weighs on gold and other commodities by making them more expensive in other currencies.

Gold's slip was backstopped by some safe-haven demand as Wall Street's slide continued, with all three major indexes dropping around 0.7%. The rate-sensitive Nasdaq fell for the ninth straight session, its longest losing streak since 2016.

The other precious metals were mixed, with silver and platinum adding 0.2% and 1.9%, respectively, while palladium dropped 2.6%.

At the Comex close: December gold slipped $9.70 to $1,712.90; December silver added 3 cents, to $17.91; October platinum picked up $15.60 to $833.90; and December palladium shed $52.90 to $1,973.20 per ounce.