Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.3% to close under $1,285 as weak US inflation and consumer data did little to alter expectations that the Fed will raise interest rates in December. The metal fell 1% for the week and 2.7% for the month, but still closed out a strong quarter 3.6% higher.

Inflation remained anemic in August and consumers spent less, raising questions about the economy's momentum entering the fourth quarter. Accounting for roughly 70% of GDP, consumer spending edged up 0.1%, following a 0.3% rise in July. Adjusted for inflation, it fell 0.1% for the first decline since January. And Consumer sentiment fell in September, according University of Michigan survey data released today, undermined by hurricanes Irma and Harvey.

The Fed's preferred measures of inflation, the so-called personal consumption expenditures (PCE) index and core PCE, rose just 0.1% for the fourth straight month. The annualized core PCE slowed to 1.3%, the smallest year-on-year increase in nearly two years, well-short of the Fed's target 2%.

Still, Fed Chair Janet Yellen signaled this week that anemic inflation will not deter the Fed from another rate hike in December. Following the central bank's meeting on policy, Yellen said "moving too slowly" on rate hikes would risk a spike in inflation and destabilized financial markets. The hawkish outlook boosted the dollar to a one-month high, pressuring gold into weekly and monthly losses.

Gold managed an impressive 3.6% gain for the quarter nonetheless, driven by safe-haven demand after North Korea tested a nuclear bomb and ICBMs potentially capable of carrying it to US soil. Threats and saber-rattling by Kim Jong Un and President Trump have further amplified tensions, underpinning gold.

The other precious were mixed. Silver dropped 1% today and 4.8% this month, but managed a gain of 1% this quarter. Platinum dropped 1.1% on the day and 0.8% this quarter. Palladium added 0.9% today and a whopping 12% this quarter, surpassing platinum for the first time in 16 years.

At the Comex close: December gold slid $3.90 to $1,284.80; December silver dropped 17 cents to $16.68; January platinum lost $10.20 to $915.50; and December palladium gained $9 to $936.85 an ounce.