AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

7/3/2019: Gold rises to new 6-year high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.9% to close at a 6-year high near $1,421 after another round of soft US data boosted expectations that the Federal Reserve will cut interest rates this month. The metal traded as high as $1,441 earlier in the day before easing back on profit-taking.

Two gauges of the services sector showed the economy continuing to lose momentum in June. The ISM nonmanufacturing index fell to the lowest level in 2 years, and the Markit services PMI hovered near a 39-month low. Including industries like finance, food service, health care, and retailing, the services sector comprises around 70% of GDP.

The manufacturing sector is faring no better. The Commerce Department reported factory orders fell 0.7% in June, while the ISM manufacturing index dropped to a 2-year low.

Private-sector job creation was weak for a second month, with ADP reporting just 102,000 positions added in June. While better than May's revised 41,000, the total fell short of forecasts and far below the monthly average of 211,000 jobs from February through April.

The latest round of subpar data reinforced expectations that the Fed will cut rates, perhaps by a half-point, at its July meeting. Lower rates are bullish for gold, in part, because they weaken the dollar, which makes the metal less expensive overseas, thereby spurring global demand. Investors are attracted to gold as a hedge against currency devaluation and inflation.

Adding to easy-money expectations, President Trump has nominated a pair of dovish economists, Christopher Waller and Judy Shelton, to join the Fed's Board of Governors. Both have advocated aggressively for lower interest rates. And IMF director Christine Lagarde has been nominated to replace Mario Draghi as head of the European Central Bank. Lagarde has long been a proponent of monetary easing.

The other precious metals were also higher, with silver adding 0.6% while platinum and palladium rose 1.2% and 0.8%, respectively.

At the Comex close: August gold gained $12.90 to $1,420.90; September silver added dime, to $15.34; October platinum climbed $10.10 to $843.60; and September palladium picked up $13 to $1,565.80 an ounce, a new record.