Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.8%, retracing yesterday's gains, as the dollar rose after the minutes from the Fed's December meeting were released. Several members of the FOMC voiced a preference for ending quantitative easing (QE3)sometime this year, anticipating that the benefits would diminish and the risks, especially of rising inflation, would increase if the program of buying $85 billion per month in Treasuries and mortgage-backed securities were to be extended into 2014. No mention was made of raising short-term interest rates any time soon. Tantamount to printing money, QE3 has devalued the dollar and boosted demand for gold as a hedge against long-term inflation. Equities and most commodities also dropped on the prospect of reduced monetary stimulus. Silver surrendered 0.9% and palladium lost 1.5% while platinum gained 0.8%.

At the Comex close: February gold slipped by $14.20 to $1,674.60; March silver dropped 29 cents to $30.72; April platinum gained $11.90 to $1,579.90; and March palladium fell $10.80 to $697.15 an ounce.

The dollar received additional support today from renewed concerns about the stability of the euro. Spain's progress toward fiscal sustainability is doubtful, according to a report from Citi, and Italy is expected to elect new leaders opposed to austerity measures in elections next month, which may undermine that nation's solvency. Citi expects the ECB to cut rates on the euro next month. A rising dollar pressures the gold price because gold is denominated internationally in dollars and becomes more expensive to holders of other currencies.