Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold gained 0.1% to close near $2,502, another record, as the dollar and Treasury yields weakened ahead of this weeks Fed minutes and the start of the annual Jackson Hole meeting. Silver jumped 1.9% to close at $29.33 an ounce.

Fed Chair Jerome Powells speech on Friday at the Jackson Hole conference of global central bankers is expected to telegraph plans for the Feds upcoming pivot toward lower interest rates. Falling inflation and softening in the job market have prompted a string of regional Fed officials to suggest recently that the time has come to lower rates.

Fed fund futures traders put the odds of at least a quarter-point cut at 100%, with the odds of a bigger reduction standing at around 25%. In a new Reuters poll, economist project a quarter-point cut at each of the three meaning Fed meetings this year.

Investors will also scrutinize Wednesdays release of the minutes from the July Fed meeting, hoping for additional clues about the amount and frequency of monetary easing.

Benchmark 10-year Treasury yields retreated slightly on the dovish outlook, boosting gold by decreasing the opportunity cost for holding it instead of bonds for safety.

The dollar fell 0.5% against major rivals, hitting a seven-month low. A weaker buck supports gold and other commodities by making them less expensive in other currencies, buoying overseas demand.

In addition to the easing rate view, gold remains strongly supported by acute geopolitical tension in the Middle East and Ukraine.

Adding to the bullish outlook, several banks in China have received new quotas from the Peoples Bank of China for importing bullion after a two-month pause. The quotas control the volume of gold flowing into the worlds leading consumer of the metal.

Platinum inched up less than 0.1% while palladium shed 2.5%.

At the New York spot close: gold gained $3.20 to $2,501.80; silver surged 55 cents to $29.33; platinum added 50 cents, to $962.90; and palladium fell $23.80 to $919.80 an ounce.