Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.6% after the dollar strengthened behind reports of an accelerating recovery in the crucial U.S. housing sector. The Commerce Department said construction starts for new single-family homes jumped to a four-year high in October, far surpassing expectations. Home-builder sentiment rose this month to the highest level in six years, according to data released on Monday. And sales of existing homes rose unexpectedly in October while inventories dropped to the lowest level in almost ten years. Because a strong recovery in housing should drive GDP and employment growth, currency traders read the data as possibly reducing the duration of QE3 and other monetary policies that have weakened the dollar. A rising dollar puts pressure on gold and other commodities that are denominated in dollars because they become more expensive for holders of other currencies. The other precious metals fell harder than gold, with silver dropping 0.8%, platinum 0.7%, and palladium 1.1%

At the Comex close: December gold slipped $10.80 to $1,723.60; December silver lost 26 cents to $32.93; January platinum shed $10.80 to $1,573; and December palladium dropped $6.95 to $638.35 an ounce.

Billionaire investing legends John Paulson and George Soros, who have been increasing their investments in gold bullion ETFs, now have largest combined holdings ever for private investors, according to a Bloomberg report. Paulson made billions with prescient bets against subprime mortgages in 2007. He now owns around 66 tons of gold valued at $3.6 billion, more than many central banks. Soros increased his stake by nearly 50% last quarter, to $221 million. Both expect higher gold prices because of deepening currency devaluation and inflation risk as a result of central banks easing. Analysts recently surveyed by Bloomberg think the same thing, estimating that gold prices will rise every quarter next year and average $1,925 an ounce in Q4 of 2013.