Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.3% to close near $1,981 as soft US retail and manufacturing data pressured Treasury yields and boosted demand for safe-haven assets. It was the metal's highest finish in five weeks.

US retail sales disappointed in June, rising a scant 0.2% to reveal a softening in this key area of the economy. So-called core sales, excluding categories like cars, gas, and food service, rose 0.6%. Retail sales comprise around one-third of consumer spending, which in turn accounts for roughly 70% of GDP.

The US manufacturing sector weakened further, the Fed reported, with industrial production falling 0.5% in June. Production also fell 0.5% in May, revised lower from the initial estimate of 0.2%. Lower demand for goods, increasing inventories, and the uncertain economic outlook were cited as reasons.

The softer US data comes one day after reports that China's economy weakened by more than expected in the second quarter, raising concerns about overall global growth.

Benchmark 10-year Treasury yields fall back to 3.8% as traders bet that weaker data and falling inflation will prompt the Fed to end its rate-hike cycle after one more increase. Falling rates and yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Fed fund futures trading now puts the odds of a quarter-point rate hike in July at 100%, according to CME FedWatch, followed by a 40% likelihood of a rate cut in January.

The dollar initially plunged to a 15-month low following the retail sales print, then bounced back to a slight rise of 0.1% after traders found solace in the relatively solid core-sales figure of 0.6%.

The other precious metals were also higher, with silver jumping 1% while platinum and palladium rose 0.7% and 2.8%, respectively.

At the Comex close: August gold surged $24.40 to $1,980.80; September silver rose 24 cents to $25.26; October platinum picked up $6.90 to $994.40; and September palladium advanced $35.40 to $1,316.50 an ounce.