Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged nearly 2%, closing just under $1,310 for its biggest gain in two weeks, as a weaker dollar and strong Chinese trade data boosted demand for the metal as an alternative store of value. China reported July exports rising 5.1% from a year earlier and nearly 11% from June, far more than expected. The positive data signaled accelerating growth in the world's second largest economy, driving commodities higher and increasing gold's appeal as a hedge against inflation.

The dollar fell for a fifth straight session, further supporting gold's rally. Higher weekly jobless claims combined with last Friday's weak non-farms payroll report to add uncertainty about when the Fed will be begin to taper quantitative easing, its bond-buying program intended to increase employment and overall economic growth. Fed officials have repeatedly predicated reductions in easing upon sustained improvements in the labor market. Tantamount to printing money, QE devalues the dollar and increases the risk of long-term inflation, boosting gold prices.

The dollar was also pressured by recent data suggesting that the eurozone economy is improving. Manufacturing hit a two-year high in July, driving European stocks to a two-month high this week and boosting the euro against the dollar. A weaker dollar makes gold and other commodities less expensive to holders of other currencies, increasing demand. The other precious also enjoyed big gains today, with silver jumping 3.5%, platinum 3.7%, and palladium 2.1%

At the Comex close: December gold surged $24.60 to $1,309.90; September silver jumped 68 cents to $20.19; October platinum rallied $53.30 to $1,491.60; and September palladium gained $15.40 to $738.55 an ounce.