Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained nearly 1% to close above $1,276, its highest level in more than four months, as investors continued to seek protection from pervasive market volatility following Switzerland's unexpected unpegging from the euro. The metal has surged 4.9% this week for biggest weekly rise since August 2013, and 7.9% so far this year�its best annual start since 1986.

Yesterday, virtually without warning, the Swiss National Bank dumped its three-year policy pegging the value of the Swiss franc to the euro. The abrupt reversal spread shockwaves throughout global currency markets, sending the Swiss franc skyrocketing against the euro and dollar, and rallying gold by $30 an ounce.

Today's extension of the gold rally came despite a rising dollar, which picked up 0.4% against major rivals. Typically, a stronger dollar pressures gold because it is denominated in dollars for international trade, becoming more expensive to users of other currencies. Today, they rose in tandem in flights to safety.

Gold was further supported by reports that U.S. consumer inflation fell in December by the most in six years, reducing pressure on the Fed to raise interest rates later this year.

Traders are increasingly bullish on gold. Open interest in New York gold futures surged yesterday by 5.6%, the most in five years, signaling expectations of higher prices to come. Sharps Pixley CEO Ross Norman today forecast an average price of $1,321 in 2015, with a high of $1,425.

The other metals were mostly higher. Silver jumped 3.8% today and a whopping 8% this week. Platinum added nearly 0.5% for a 3.1% weekly gain. Outlier palladium, which is less of a safe-haven asset, fell back 1.6% today and nearly 5% this week.

At the Comex close: February gold gained $11.30 to $1,276.10; March silver jumped 65 cents to $17.75 April platinum added $5.90, to $1,268.70; and March palladium fell back $12 to $754.30 an ounce.