Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinExtending its rally to a third session, New York spot gold added 0.4% to close at a two-week high of $2,435 as another spate of weak US data stoked rate-cut hopes while escalating Middle East turmoil drove safe-haven inflows. Silver shrank 1.6% to finish at $28.33 an ounce.

US manufacturing shrank by more than expected in July, with the ISM index falling under 47%, where anything under 50% signals contraction. It was the fourth straight month of a deepening slump.

First-time jobless claims jumped to 249,000 last week, the highest level in nearly a year. Coming one day after ADP reported a mere 122,000 new jobs were added to private payrolls in July, the fewest in six months, the jobless data suggests further slowing in the labor market.

In his post-meeting press conference yesterday, Fed Chair Jerome Powell suggested that employment is rapidly becoming the central banks focus as it strives to fulfill its dual mandate of full employment and price stability.

Tomorrows release of the governments nonfarm payrolls report should give a clearer sense of the labor market.

Following yesterdays dovish messaging from Powell, who said explicitly that a September rate cut is on the table, Fed fund futures traders are pricing in as many as three quarter-point reductions by the end of the year.

Benchmark 10-year Treasury yields fell under 4% for the first time since March on the shifting rate view. Falling yields boost gold by decreasing the opportunity cost for holding it instead of bonds.

Diverging from yields, the dollar added 0.3% after the Bank of England cut interest rates from 16-year highs.

Both gold and the dollar also benefited from flights to safety after a major Hamas leader was assassinated in Tehran, prompting new threats of revenge against Israel and threatening to widen the Gaza war.

Meanwhile, the World Gold Council reported that a record percentage of global central banks are expecting to add gold to their reserves in the next 12 months. Aggressive buying by central banks over the past year has been an important driver of record-high gold prices.

Platinum and palladium fell 1.6% and 3.3%, respectively.

At the New York spot close: gold gained $8.50 to $2,435; silver slid 45 cents to $28.33; platinum dropped $15.90 to $970.50; and palladium shed $30.10 to $895.10 an ounce.