Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold inched up in choppy trade to close above $1,370 as improving global manufacturing data boosted its appeal as a hedge against inflation. China's preliminary PMI report showed factory output expanding in the world's second largest economy, fueled by growing domestic consumption. Eurozone manufacturing and business activity, led by Germany, jumped to a 26-month high in another sign that the recovery is gaining strength.

Gold held near recent highs despite a mild rise in the dollar and a bounce in U.S. and global equities. Oil surged more than 1% behind upbeat global manufacturing and the other precious metals also gained, with silver adding 0.7%. Platinum and palladium rallied by 1.4% and 1.1%, respectively, on supply concerns after South African miners again threatened to strike.

At the Comex close: December gold added 70 cents, to $1,370.80; September silver picked up 7 cents to $23.04; October platinum gained $21 to $1,540.10; and September palladium jumped $8.15 to $755.05 an ounce.

Gold was also supported by a rise in U.S. jobless claims to the highest level in a month, which added to uncertainty about when the Fed is likely to begin its taper of quantitative easing. Yesterday's release of the minutes from July's FOMC meeting was equivocal about whether the taper would begin in September or later in the year. Disappointing unemployment data could delay the taper as Fed Chair Ben Bernanke has explicitly tied the bond-buying program to sustained improvements in the labor market. QE supports higher gold by devaluing the dollar and increasing the risk of long-term inflation.

Analysts are becoming more bullish on gold in the wake of record-high physical demand out of China and India. According to Bloomberg, Bank of America is projecting fourth-quarter average price of $1,495 and JP Morgan expects gold to rise every quarter through the end of 2014.