Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold closed 0.9% lower after upbeat economic data weighed on its safe-haven appeal. However, it rebounded strongly in after-hours trading, jumping from $1,313 to as high as $1,328 following the release of the FOMC's dovish post-meeting policy statement. The Fed downgraded its economic outlook slightly and gave no hint of reductions in quantitative easing, the program of buying $85 billion each month in long-term bonds to drive down interest rates and unemployment.

Traders had been bracing for a possible announcement that the taper would begin in September. Now many believe the Fed may hold off until December. Calling the pace of growth "modest" rather than "moderate," as it had consistently for most of the past year, the Fed warned of rising mortgage rates and falling inflation, both of which could justify continued easing. QE has supported higher gold and equities prices because it devalues the dollar, increases liquidity, and raises the risk of long-term inflation. The dollar tumbled immediately on the statement's release, in lock-step with gold's sharp break higher.

Gold's earlier loss came after the government reported that GDP grew 1.7% in the second quarter, well above the 1% forecast by most economists. In addition, ADP reported 200,000 jobs added to private payrolls in July, also more than forecast. Despite the lower close gold posted gains of 7.3% for July, its best month in a year and a half.

At the Comex close: December gold fell $11.80 to$1,313; September silver dropped 5 cents to $19.63; October platinum lost $8.20 to $1,429.30; and September palladium gave up $2.30 to $726.35 an ounce.