Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold edged down 0.1%, holding most of Friday's 1.7% rally, as gloomy economic reports and a falling dollar kept most traders on the sidelines ahead of tomorrow's Senate testimony by Fed Chair Ben Bernanke. The IMF cut its 2013 forecast for world growth to 3.9% because of deepening debt problems in Europe, urging the ECB to undertake further easing measures to stimulate demand and increase liquidity. Meanwhile, U.S. economic data continues to weaken, with retail sales falling for the third straight month in June, its longest losing streak since 2008. And in a Marketwatch poll, economists have slashed their growth forecasts to "near-stagnation" at 1.3%. The Dow fell for the seventh time in eight sessions. Silver dropped 0.2% while sister metals platinum and palladium, more heavily tied to industry, each lost 1.3%.

At the close: August gold dipped 40 cents to $1,591.60; September silver lost 5 cents to $27.32; October platinum fell $17.90 to $1,417.30; and September palladium dropped $7.80 to $577.85 an ounce.

With today's weak retail sales data, coming after a litany of disappointing economic reports since the last FOMC meeting, market expectations are growing for another round of quantitative easing from the Fed. Bernanke will deliver his semi-annual report on monetary policy to the Senate on Tuesday and Wednesday. Consensus is building that, while he won�t provide an explicit timetable for QE3, he will signal a greater openness to expanding the Fed's efforts to lower unemployment and stimulate growth. The dollar fell from a two-year high against the euro and oil rallied by 1.5% as traders priced in the growing likelihood of QE3. Another round of easing would devalue the dollar and increase the price of commodities like oil and gold because they are denominated internationally in dollars, making them more expensive for holders of other currencies.