Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2%, holding on to most of its nearly 1% gains from the previous two sessions, as positive economic data in the U.S. and China stoked risk appetite. Service industries in the U.S. expanded in January and the ISM employment gauge for services was the strongest in seven years, fueling hopes for an improving labor market and rising consumer spending. Service industries also grew in China, accelerating at their fastest rate since August and putting the Chinese economic recovery on firmer footing. The optimistic data drove traders out of safe-havens and back into equities, pushing the Dow nearly 100 points higher to just under 14,000. Treasuries fell while the other precious metals gained on commodity demand, with silver adding 0.5%. Sister metals platinum and palladium rose by 0.5% and 1%, respectively, to multi-month highs behind a brighter outlook for autocatalyst manufacturing.

At the Comex close: April gold slipped $2.90 to se$1,673.50; March silver added 16 cents, to $31.88; April platinum rose $9.10 to $1,707.20; and March palladium jumped $7.65, or 1%, to $765.45 an ounce.

China's gold imports from Hong Kong nearly doubled last year to a record 835 metric tons, according to Bloomberg. The numbers combine central bank buying and purchasing of physical gold for jewelry, manufacturing, and inventment. While China doesn�t disclose its holdings, it keeps a mere 2% of its currency reserves in gold, according to recent estimates, compared to 70% to 75% for the U.S., France, and Germany. With the world's largest currency reserves, estimated at around $3.3 trillion, China has the capacity to drive the gold market in unprecedented ways if it decides to match the holdings of major developed economies.

In another bullish sign, China�s per capita income rose in 2012 by 9.6% in real terms (after inflation) for urban residents, and by 10.7% for rural residents, the National Bureau of Statistics said last month. Rising Chinese incomes are quite bullish for gold because a sizeable portion of this new wealth is expected to enter the gold market, according to the Financial Times. The government has been promoting gold investment by expanding trade on the Shanghai Gold Exchange, relaxing gold ownership rules, and encouraging the spread of gold-related investment products like ETFs.