AGE Daily Gold Update

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

7/12/2019: Gold rallies for the day and week

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.4% to close above $1,412 as soft wholesale inflation pressured the dollar and boosted alternative stores of value. The metal finished the week 0.9% higher, spurred by a dovish rate view from the Fed.

The Producer Price Index rose a scant 0.1% in June, with an uptick in the cost of services largely offset by falling energy prices. The 12-month rate of wholesale inflation fell to 1.7%, the weakest since January 2017. Tame inflation gives the Fed additional leeway to reduce interest rates.

While the core Consumer Price Index rose 0.3% in June, as reported yesterday, the Fed's preferred gauge of consumer inflation, the so-called core PCE index, remains stuck at 1.6% year-over year, well under the 2% target.

The dollar slipped for the third straight session as speculation builds that the Fed will cut rates later this month. Fed Chair Jerome Powell all but committed to lower rates during this week's testimony on monetary policy before Congress. Focusing on the "uncertainties" facing the US outlook including trade conflicts and slowing global growth, Powell promised to "act appropriately" to "sustain the expansion."

Powell's increasingly dovish outlook was reinforced by the midweek release of the minutes from the Fed's June meeting. Committee members admitted they were caught off-guard by the recent barrage of weak US economic data, and "many" said they were prepared to cut interest rates if weakness persists.

Lower interest rates typically weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. A falling dollar, in turn, supports gold and other commodities priced in it for global trade by making them less expensive overseas.

The other precious metals were mixed for the day and week. Silver rose 0.6% today and 1.6% this week. Platinum gained 0.5% for a weekly rise of 2.9%. Palladium fell 1.1% on the day and 1.4% on the week.

At the Comex close: August gold gained $5.50 to $1,412.20; September silver rose 9 cents to $15.24; October platinum picked up $3.70 to $834.60; and September palladium fell $16.70 to $1,542.40 an ounce.