Gold News & Info

Source: Marketwatch

San Francisco— Gold futures closed near a three-week low Tuesday to mark a four-session loss of more than $29 an ounce, extending declines as the Israel-Hezbollah cease-fire eased international worries.

An unexpected decline in core wholesale prices and weaker-than-expected manufacturing data helped lower inflation concerns. The weak data prompted a drop in the odds of a September interest rate hike and weighed on the U.S. dollar, but failed to provided a boost for the precious metal.

December gold futures closed down $6.40 at $632.90 an ounce on the New York Mercantile Exchange. Earlier in the session, the front-month contract hit a nearly three-week low of $630.50.

The contract has now lost $29.10, or 4.4%, in the past four sessions, as an Israeli-Hezbollah cease-fire came into effect and the British government downgraded its terror threat.

Gold is viewed by many as both a hedge against inflation and as a safe haven during times of international tension.

"The gold market is obviously seeing flight to quality liquidation in the wake of the Middle East cease-fire and, not surprisingly, because of the rather significant correction in oil prices," Nell Sloane, an analyst at NS Futures, said in daily commentary.

"In fact, the investment or flight to quality crowd seems to be consistently backing away from the market and is doing so in a moderately aggressive fashion," she said.

The U.S. Labor Department said Tuesday that its producer price index for finished goods rose 0.1% in July, while the core PPI, which excludes food and energy prices, fell 0.3%. Economists surveyed by MarketWatch had been expecting PPI to rise 0.3% and core PPI to rise 0.2%, on average.

Elsewhere, the New York Federal Reserve Bank's Empire State Manufacturing index fell to 10.3 in August — the slowest growth pace since June 2005 — from a revised 16.6 in July, while economists had been forecasting a decline to 13.9 from the initial estimate of 15.6.

The data pushed the price of the September Fed fund futures contract up 0.01 to 94.73, which implies a 24% chance that the Fed will raise its target on overnight rates to 5.5% from 5.25% when it meets Sept. 20. Late Monday, the odds of a hike were 36%.

As a result of the lowered outlook for a rate hike, the U.S. dollar fell vs. its major rivals, but that apparently wasn't enough to lift investment demand for gold. See Currencies.

In other metals, September silver slipped 7.5 cents to close at $12.085 an ounce.

September copper finished down 0.95 cent at $3.5275 a pound, October platinum gained $8.10 to close at $1,241.40 an ounce and September palladium advanced $6.40 to end at $324.70 an ounce.

On the supply side, gold inventories were up 321 troy ounces at 8.18 million troy ounces as of late Monday, according to New York Mercantile Exchange data.

Silver supplies rose by 601,301 troy ounces to 103.7 million, while copper was unchanged 6,756 short tons.

The indexes tracking the metals sector headed higher Tuesday following declines of more than 1% on Monday. The Amex Gold Bugs Index was up 1.4% at 329.42 and the CBOE Gold Index added 1.2% to trade at 142.46. The Philadelphia Gold and Silver Index traded at 140.93, up 0.9%.

Metals exchange-traded funds were mixed. The StreetTracks Gold Trust ETF shed 0.6% to $61.85, the iShares Silver Trust ETF rose 0.2% to $120.71, and the Market Vectors-Gold Miners ETF traded up 1.1% at $38.44.