Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold jumped 0.7% to close above $1,253 for its biggest gain in three weeks after the ECB announced a new series of stimulus measures to boost growth and inflation in the Eurozone. In addition to cutting interest rates and adding an assortment of new policies to increase liquidity, the central bank made history by slashing its deposit rate to negative 0.1%, meaning banks will have to pay to keep money on deposit at the ECB. Bank head Mario Draghi indicated that more easing programs will follow, most likely including Fed-style asset-purchases known as quantitative easing.

The euro initially fell on the announcement and the dollar rallied before both currencies reversed course as traders digested the details of the easing program. Expectations are that the shared currency is likely to strengthen over time due to increased lending and support for stronger growth, which will draw capital into the Eurozone. The ECB measures are seen as intentionally inflationary and therefore supportive of higher gold prices in the longer term.

Despite data that U.S. retailers beat expectations in May and consumer sentiment rose for the first time in five weeks, the dollar fell against major rivals, boosting gold and other precious metals denominated in the U.S. currency for international trade. Silver outpaced gold's gains by surging 1.6%. Platinum and palladium added 0.8% and 0.3%, respectively.

At the Comex close: August gold jumped $9 to $1,253; July silver surged 29 cents to $19.08; July platinum added $11.20, to $1,445.10; and September palladium picked up $2.30, to $839.45 an ounce.