Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.5%, snapping a four-session losing streak, as soft data on housing and consumer confidence underscored expectations that the Fed will continue quantitative easing at its meeting this week. U.S. home prices declined in November, reminding investors that this crucial sector is not yet out of the woods. And consumer confidence fell to its lowest level in more than a year, reflecting pessimism about the economic outlook and persistently high unemployment.

While most analysts already believed the Fed has no intention of reducing stimulus any time soon, today's soft data caused to dollar to fall, most stock indexes to rise, and all four precious to rally as traders grew more confident of continued easing. Akin to printing money, quantitative easing supports higher asset prices because it increases liquidity and devalues the dollar. A weaker dollar supports higher gold prices because gold is denominated in dollars internationally, making it more attractive to holders of other currencies. Silver added 1.3%, platinum rose 1%, and palladium picked up 1.2%.

At the Comex close: February delivery gained $7.90 to $1,660.80; March silver added 40 cents, to $31.18; April platinum rose $16.70 to $1,678.90; and March palladium picked up $9.20 to $749.75 an ounce.