Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.5% in volatile trade after comments by the ECB's Mario Draghi caused the euro to plummet and the dollar to rally, pressuring precious metals. Speaking in Frankfurt, Draghi pointed to down-side risks in the eurozone economy, reiterated the ECB's accommodative monetary policy, and warned that a stronger euro would be harmful to the central bank's efforts to pull the region out of recession. The euro promptly fell by nearly 1%, the most since July, as traders shifted into dollars. A rising dollar pressures gold and other commodities by making them more expensive to holders of other currencies. U.S. and global equities dropped across the board and the other precious metals also fell, with silver losing 1.5%, platinum 0.8%, and palladium 1.9%.

At the Comex close: April gold fell $7.50 to $1,671.30; March silver lost 47 cents to $31.40; April platinum slid $14.20 to $1,722.30; and March palladium dropped $14.35 to $750.45 an ounce.

Despite the headwinds presented by a stronger dollar, gold showed notable resilience today as it surged more than $21 to an intraday high above $1,684 before falling back. Comments from Chicago Fed President Charles Evans, an influential voting member of the FOMC, provided a counterweight to Draghi's and encouraged gold buyers. In an interview with CNBC, Evans emphasized that quantitative easing will be needed for quite some time, perhaps well into 2014. In his view, monthly gains of 200,000 jobs for six straight months should be achieved before the Fed considers reducing its program of buying $85 billion per months in long-term debt. He anticipates unemployment remaining above 7% until late 2014, and above 6.5%, the Fed's published threshold for ending near-zero interest rates, until well into 2015. Quantitative easing and negative real interest rates are quite bullish for gold because they devalue to dollar and increase the long-term risk of inflation.