Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.5% after two more Fed officials expressed their belief that U.S. monetary stimulus should not end any time soon. John Williams, president of the San Francisco Fed, said yesterday in California that the current program of quantitative easing–buying $85 billion in government bonds each month–"will be needed well into 2013" in order to drive down borrowing costs and stimulate employment. In addition, Williams said, interest rates will have to remain near zero well into 2015. Chicago Fed President Charles Evans echoed these views in a speech in Hong Kong. Both Fed statements came just one day after Minnesota Fed President Narayana Kocherlakota warned that the current scope of monetary easing may be insufficient to promote economic growth and reduce unemployment. Monetary easing undermines the dollar and supports higher prices for precious metals and other commodities that are denominated in dollars for international trade. Silver added 2.3%, platinum 1.7%, and palladium 0.2%.

At the Comex close: February gold gained $8.80 to $1,669.40; March silver added 70 cents, to $31.11; April platinum rose $27 to $1,658.20; and March palladium picked up $1.85 to $703.30 an ounce.

Gold was further supported�and the dollar undermined�by a report from the Organization for Economic Cooperation and Development (OECD), an economic think-tank based in Paris, saying the eurozone's economy will stabilize in the next few months. The news strengthened the euro at the dollar's expense. And the Bank of Japan has agreed to double its inflation target from 1% to 2%, opening the door to yet more monetary easing in the world's third-largest economy and spurring demand for gold as an alternative store of value.