Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% to close under $1,966 after soft global data and a slight uptick in US inflation buoyed the dollar, undermining alternative stores of value. The metal fell 2.2% for the month under pressure from rising Treasury yields.

The Fed's preferred measure of inflation, Personal Consumption Expenditures index rose 0.2% in July, lifting the 12-month to 3.3% from 3% in June. The so-called core PCE, excluding food and energy, also rose 0.2% to lift the annualized rate from 4.1% to 4.2%.

The mild increase in prices was fully in line with expectations and is not expected to alter the Fed's path for rate hikes this year. Fed funds futures traders still see an 90% likelihood of no change at the September meeting and a 44% chance of a quarter-point increase in November.

Separately, initial jobless claims slipped 4,000 to a one-month low of 228,000 last week. But the total number of Americans receiving benefits increased by 28,000 to 1.73 million, the most since early July.

The Chicago Fed region's gauge of business activity rose in August to the highest level in a year. But it failed to break 50, meaning the region remains in contraction.

China's factory activity shrank for the fifth straight month in August, underscoring concerns that the world's second-largest economy is mired in a slowdown. Manufacturing activity in Japan and South Korea, China's major rivals in Asia, also fell sharply.

Benchmark 10-year Treasury yields edged down below 4.1% after the mild PCE print. Yields remain elevated, however, after reaching a 16-year high above 4.3% in mid-August when the minutes from the Fed's July meeting signaled a willingness to keep rates higher for longer. Higher rates mean higher yields, which create headwinds for gold by increasing the opportunity cost for holding it instead of bonds.

The dollar rose 0.4% against major rivals after the euro was undercut weaker-than-expected economic growth and elevated German unemployment. A rising dollar weighs on gold and other commodities by making them pricier in other currencies.

The other precious metals were lower for the day and mixed for the month. Silver fell 1.2% for a monthly loss of 0.6%. Platinum slipped 0.9% today but rose 1.7% this month. Palladium shed 0.8% for a monthly retreat of 4.5%.

At the Comex close: December gold lost $7.10 to $1,965.90; December silver slipped 29 cents to $24.81; October platinum dropped $8.90 to $974.40; and December palladium declined by $10.30 to $1,218.70 an ounce.