Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold broke a two-day winning streak, plunging with equities and commodities after the minutes from Federal Reserve meeting in March, released today, showed less inclination toward another round of monetary stimulus. Gold slipped 0.5% before the Fed minutes and then lost another 1.5% on the news. The dollar rallied and U.S. treasury bonds tumbled. Additional easing would further weaken the dollar and support higher gold prices because gold and other commodities are denominated in dollars internationally, becoming more attractive when the dollar loses value. Silver, platinum, and palladium all swung from minor gains at the close to losses of around 1.4%, 0.6%, and 0.4%, respectively, in electronic trading after the Fed release.

At the close: June gold was down $7.70 to settle at $1,672; May silver was up17 cents to $33.27; July platinum had risen $5.60 to $1,660.50; and June palladium had risen 80 cents to $659.60 an ounce

The markets obviously read today's Fed minutes as a risk-off signal. Monetary easing since 2009 has flooded the economy with more than $2 trillion in additional liquidity, doing much to power the current rally in equities and commodities. Clearly, more was expected but it would be premature to conclude that the Fed's accommodative monetary policies are at an end. These Fed minutes are a couple of weeks old. More recent comments by Fed Chair Ben Bernanke and other FOMC members since the last meeting have clearly stated that all policy options remain on the table.

Speaking today in San Diego, John Williams, president of the San Francisco Fed and voting FOMC member, emphasized that it's essential to keep strong monetary stimulus in place because of high unemployment, restrained demand in the economy, and idle production capacity. Any exit from ultra-easy monetary policy "is still well off in the future," he said. So nothing really has changed except perception�and as we saw today, that can be enough to rattle skittish markets.