Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.5%, tracking with risk assets, as the dollar gained on worsening economic reports from Europe and more data showing U.S. job growth is slowing down. Equities fell and U.S. Treasury bonds gained as investors shifted into safer havens. A rising dollar weighs on gold because it is denominated in dollars internationally, making gold more expensive for holders of other currencies when the dollar strengthens. The other precious metals followed suit, with silver slipping 0.9%, platinum 0.5%, and palladium 1.7%.

At the close: June gold slid $8.40 to $1,654; July silver dropped 29 cents to $30.65; July platinum fell $7.90 to $1,564.40; and June palladium lost $11.60 to $669.45 an ounce.

Eurozone unemployment rose to 10.9% last month, the highest in almost 15 years, as de-leveraging and austerity take their toll. Of particular concern is rising unemployment in Germany, Europe's largest and least debt-hobbled economy. And adding to the gloom, the region's manufacturing contraction accelerated in April, registering its weakest PMI reading in almost three years. Worries are also growing about whether Europe�s political leaders will stick to budget cuts needed to get debt under control. As we've said before, the deepening eurozone crisis is likely to weigh on gold initially as investors flee euros into U.S. Treasury bonds, bidding up the dollar. Ultimately, though, demand for gold as a hedge against inflation risk, brought on by accommodative monetary policies in the U.S. and Europe, will drive gold prices higher.

A new Gallup poll finds gold is American's top investment pick for the second year in a row. Gold was chosen "the best long-term investment" by 28% of those surveyed, beating out real estate (20%), stocks/mutual funds (19%), savings accounts/CDs (19%), and bonds (8%).