Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 1.2%, closing at a three-week high above $1,357, as surprisingly weak U.S. GDP hammered the dollar and pushed back expectations for a rate hike from the Fed. The metal gained 2.6% for the week and 3% for the month.

The economy expanded by merely 1.2% in the second quarter, according to government data released today, around half of most forecasts and barely more the anemic 0.8% expansion in Q1. Economists are now projecting GDP growth for all of 2016 at just 2%, lower than the 2.2% average growth from 2012 through 2015.

While consumer spending jumped 4.2%, business investment fell by the most since the Great Recession and inventories contracted for the first time since 2011, signaling headwinds for manufacturing and exports that are likely to become stiffer in the post-Brexit global economy.

The dollar plunged 1% after the GDP release as traders speculated that the Fed will be unable to raise interest rates until well into 2017. The buck was also pressured a rally in the yen after the BOJ's decision to hold interest rates steady and expand monetary stimulus by less than expected. A weaker dollar supports gold and other commodities by making them less expensive to users of other currencies.

CME FedWatch, which calculates the odds of rate hikes based on trading in Fed fund futures, lowered the probability of a December hike to merely 30%, down from more than 50% earlier this week.

The other precious metals also finished strongly higher. Silver added 0.8% for the day, 3.3% for the week, and 9.3% for the month. Platinum rose 1% for finish July 12% higher. Palladium led the way by jumping 1.6% today and a whopping $18.8% this month.

At the Comex close: December gold surged $16.30 to $1,357.50; September added nearly 16 cents, to 20.35; October platinum rose $11.70 to $1,150.60; September palladium picked up $11.10 to $709.75 an ounce.