Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold fell 1% to close under $2,402 as recession worries spurred a broad selloff across most markets, prompting traders to take additional profits from the metals recent rise to fresh all-time highs. Silver dropped 4.1% to finish at $27.08 an ounce.

Last weeks surprisingly soft US nonfarm payrolls report raised concerns that the Fed is already too late with rate cuts and the economy could be headed for recession. The economy added merely 114,000 jobs in June, far below estimates, while the unemployment rate jumped to 4.3%, the highest in nearly three years.

Spooked investors sprinted out of risk assets today, driving the Dow 2.6% lower while the SandP 500 shed 3% and the Nasdaq 3.4%. Equity markets in Europe and Asia also tumbled on fears the US economy might no longer be a reliable engine of global growth. Commodities including gold were swept up in the panic selling.

Benchmark 10-year Treasury yields slid further under 3.8% to a three-year low on flights to safety and the dollar dropped 0.5% against major rivals on speculation that the Fed will have to be more aggressive with rate cuts to make up for lost time.

With the quarter-point rate cut in September already fully priced in, the odds of a half point reduction have surged to 87%, according to CME FedWatch, up from just 11% one week ago. Traders are even beginning to bet on an emergency cut in August, before the next Fed meeting.

The coming rate cuts are expected to support substantially higher gold prices.

Platinum and palladium tumbled 5.4% and 6.4%, respectively.

At the New York spot close: gold dropped $24 to $2,401.70; silver shed $1.17 to $27.08; platinum retreated %52.10 to $915.50; and palladium lost $56.40 to $826.10 an ounce.