Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 1.5% to close at $1,119, marking its biggest one-day percentage rise in a month, as weak U.S. consumer inflation eroded the dollar and boosted demand for alternative assets.

Consumer prices fell for the first time in seven months, the Labor Department reported today, suggesting that the deflationary trend affecting Europa and Asia may be coming home. After rising slightly in July, the CPI slipped 0.1% in August, pulled lower by falling gasoline prices. The strong dollar is also to blame as it lowers import prices.

Falling inflation complicates the Fed's decision as it meets today to set monetary policy. Recent gains in the labor market and consumer spending suggest that the economy is ready for the first rate hike in nine years. But lagging manufacturing and persistently low inflation warn against it, especially with slower growth in China and Europe causing central bankers there to consider deeper monetary easing. ECB Governor Ewald Nowotny today said inflation "is a big problem" for the Eurozone after prices fell unexpectedly in August.

The dollar retreated on the soft CPI, supporting gold and other commodities denominated in it for international trade by making them less expensive to foreign buyers. Oil jumped more than 5%, helped by government data showing a drop in U.S. stockpiles of crude.

The other precious metals also finished sharply higher. Silver jumped 3.9% while platinum and palladium added 1.8% and 1.9%, respectively.

At the Comex close: December gold surged $16.40 to $1,119; December silver jumped 56 $14.88; October platinum gained $17.50 to $975.70; and December palladium picked up $11.50 to $611.95 an ounce.