Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2% from Friday's three-week high to close above $1,274 as net-positive U.S. economic data lifted the dollar, dulling appetite for alternative assets. The metal finished October down 3% on rising expectations of a December rate hike from the Fed.

Consumer spending rose at the fastest rate in three months in September, according to the Commerce Department. The rise helped boost the Atlanta Fed's GDPNow forecast of real growth to 2.7% for the fourth quarter, an improvement over Q3's 2.1% final estimate.

Business activity faltered in the Midwest in September, however, as the Chicago regional PMI fell to 50.6, just above contraction, for its lowest reading since May.

Inflation edged higher in Septemebr, with the Fed's preferred measure, the 12-month PCE index, climbing to 1.2%, the highest level in nearly two years. On the downside, rising inflation is cutting into real earnings, which is likely to pressure future consumer spending. After taxes and inflation, income was flat for the second straight month, the weakest two-month stretch in three years.

The dollar added 0.1% against major rivals as traders raised their bets on a rate hike in December. CME FedWatch places the odds at almost 78%, up from 74% yesterday. By contrast, the likelihood is merely 6% that the central bank will hike when it meets this week.

Gold was underpinned by renewed uncertainty about the U.S. presidential election after FBI Director Comey sent a vague but suggestive letter to Congress on Friday about newly discovered emails potentially related to Hillary Clinton. The unprecedented action so close to an election destabilized the markets on Friday, spurring safe-haven demand.

The other precious metals were mostly lower, with platinum and palladium sliding 0.4% and 0.1%, respectively, while silver added 0.3% close the month with loss of 7.3%.

At the Comex close: December gold slipped $2.50 to $1,274.30; December silver added 4 cents, to $17.84; January platinum lost $3.90 to $977.50; December palladium dipped 25 cents to $616.10 an ounce.