Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.9% in light trade after positive U.S. housing data encouraged a minor rally in equities, spurring investors to take profits from gold's recent winning streak and shift towards riskier assets. The dollar also dropped against a basket of other currencies. The Case-Shiller housing index showed that home prices leapt 1.3% nationally in April, for their first monthly gain since last fall. Nineteen out of twenty cities registered gains, with only Detroit remaining negative. The rest of the metals complex also fell, with silver dropping 1.8%, platinum 0.9%, and palladium 2.2%

At the close: August gold slipped $13.50 to $1,574.90; July silver fell 48 cents to $27.04; July platinum dropped $12.60 to $1,426.80; and September palladium tumbled $13.55 to $593.70 an ounce.

Today's risk rally is likely to be short-lived. As encouraging as the gains in home prices might be, other economic news today was not so positive. Posting its fourth straight monthly decline, consumer confidence fell in June to a five-month low because of mounting employment and income concerns. And manufacturing in the mid-Atlantic region went negative for the first time in five months, according to the Richmond Fed, missing expectations by a large margin.

Across the Atlantic, storm clouds over Spain are getting darker. After Moody's downgrading of 28 Spanish banks yesterday, credit-default swaps on Spain's biggest bank skyrocketed by 23%, making its debt far more expensive to insure. Yields on Spanish bonds are still rising, and it is widely expected that Moody's will downgrade Spain's sovereign rating to junk status within the next few weeks. Meanwhile, Germany's Angela Merkel declared that Germany will not share total debt liability with the eurozone as long as she lives, effectively blocking the path to resolving Spain's sovereign crisis. Gold reached its all-time high over $1,900 last September as investors sought refuge from eurozone debt problems.