Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged 1.5% for its biggest one-day rally since November after an abysmal jobs report rattled the markets and improved the prospects for continuing monetary stimulus. U.S. non-farm employers added a scant 88,000 jobs in March, the worst showing in nine months and less than half of the number forecast. In an ominous sign for consumer spending, which constitutes 70% of GDP, retailers actually cut more the 24,000 jobs. Additional slowing is expected in coming months as sequestration�$16 billion in cuts triggered by the budget impasse�takes effect. U.S. and global equities fell as investors shifted to safer havens like gold, silver, and Treasuries. Gold ended the week 1.2% lower. Silver gained 1.7% today but still fell by 3.9% for the week. Platinum added 1.2% but lost 2.5% for the week. Palladium slipped by 0.2% for a weekly loss of 5.8%.

At the Comex close: June gold surged $23.50 to $1,575.90; May silver gained 45 cents, to $27.22; July platinum added $17.70, to $1,535.50; and June palladium slipped $1.55 to $723.90

The poor jobs report has probably put to rest any talk that the Fed will tighten monetary policies in the near future, and that�s good news for gold. San Francisco Fed President John Williams said earlier in the week that quantitative easing, the Fed�s program of buying long-term securities in order to stimulate growth and reduce unemployment, might begin tapering off this summer. Most analysts now expect QE to continue at full-throttle until at least early 2014.

Charles Evans of the Chicago Fed has joined Narayana Kocherlakota of the Minneapolis Fed in calling for near-zero interest rates until unemployment drops to 5.5%, a full point lower than the Fed�s current target and more than two points lower than today�s 7.6%. Fed Vice Chair Janet Yellen Fed, who is widely seen as Ben Bernanke�s likely successor, now says inflation above the Fed's limit of 2.5% is acceptable if it helps to create jobs. This further loosening of monetary policy supports higher gold prices because it devalues the dollar and increases the risk of long-term inflation.