Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold extended its winning streak to six session, adding another 0.5% to close at $1,197 as falling orders for U.S. durable goods and rising business confidence in Germany weighed on the dollar, boosting demand for alternative stores of value.

Orders for durable goods dropped 1.4% in January and U.S. business investment fell for the sixth consecutive month, the Commerce Department reported today, revealing a substantial slowdown in Q1 economic growth. Morgan Stanley cut its GDP forecast to 0.9% in the first quarter while the Atlanta Fed slashed its projection to 0.3%.

Combined with yesterday's report showing flat annualized consumer inflation, the weakening data is causing traders to speculate that the Fed will be unable to raise interest rates until the end of the year. Charles Evans of the Chicago fed said today in London that there is "no compelling reason" to hurry the first rate hike in light of the "clear deflationary pressure" caused by recent dollar strength.

The dollar fell against major rivals, coming under additional pressure by a rising euro after Germany's IFO survey revealed rising business confidence in Europe's largest and most important economy. Investors continued to reduce long positions on the dollar, extending a trend that began last week when the Fed signaled a more dovish approach to monetary policy.

Central banks continued to be net-buyers of gold in February, according to the IMF, with Kazakhstan adding nearly 3 tonnes for its 29th straight month of purchases, while the Ukraine and Russia both maintained holdings.

The other precious metals tracked higher with gold. Silver added 0.1% while platinum and palladium picked up 0.4% and 0.1%, respectively.

At the Comex close: April gold gained $5.60 to $1,197; May silver added 2 cents, to $17; April platinum picked up $5, to $1,146.50; and June palladium edged up $1.70 to $765.40 an ounce.