Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained for the third straight session, adding 0.1% to close near $1,317, after an unexpected rise in jobless claims raised questions about the strength of the labor market, spurring safe-haven bids.

First-time applications for unemployment benefits jumped to a six-week high last week, far exceeding forecasts. Following yesterday's report that retail sales have gone flat, the data is raising speculation that the Fed may decide to hold interest rates near zero for longer than expected. The dollar rolled back against major rivals on the news, supporting prices for gold and other commodities denominated in the currency for international trade.

Gold received additional support from reports that the Eurozone recovery stalled in the second quarter, with its three largest economies either flat or contracting. Germany and Italy both shrank 0.2% while France was stagnant. The poor showing increases the odds that the ECB may institute Fed-styled quantitative easing to stimulate growth. Tantamount to printing money, QE is bullish for gold because it increases the risk of long-term inflation.

Safe-haven demand for metals was capped by rising risk appetite after conciliatory remarks by Russia's President Putin helped to ease fears of an imminent invasion of the Ukraine. The Russian aid convoy of 260 trucks, stopped at the border yesterday, is likley to be allowed passage into the beleaguered region. Equity markets rallied in response, with the Dow and Global Dow adding more than 0.3%.

The World Gold Council reported today that global demand for the metal fell 16% in the second quarter, led by slowdowns in China and India, the world's largest gold consumers. Central bank purchases remained solid at 118 tons, posting a 28% increase year-over-year. Central banks add to gold reserves to hedge against currency and inflation risk.

The other precious metals were mixed, with silver and palladium adding 0.3% and 0.2%, respectively, while palladium edged down 0.1%. At the Comex close: December gold gained $1.20 to $1,315.70; September silver added 6 cents, to $19.91; September platinum dropped $2.20 to $1,467.70; and October palladium picked up $2 to $883.60.