Daily Gold Update

Source: American Gold Exchange

Austin— Gold rebounded from intraday losses to reach a 5-week high as the dollar continued its slide and traders whiffed some inflation in the Producers Price Index report today. It was gold's sixth winning session out of seven. Also weighing on the dollar and supporting gold was confirmation that the IMF is trying to increase dramatically its lending fund to a total of $1 trillion. The Global Dow gained nearly 1%.

At the Comex close: February gold gained $4.30 to $1,659.90; March silver rose 41 cents to $30.54; April platinum rallied late but still dropped $3.40 to $1,525.30; March palladium picked up $13 to $668.50 an ounce.

Although overall U.S. wholesale prices dropped unexpectedly in December, the Labor Department figures revealed that, excluding food and energy, inflation increased more than expected. The lower overall inflation numbers will give Fed Chairman Bernanke more room for monetary easing later this year, if necessary, which would support higher short-term gold prices. At the same time, the higher net-energy-and-food numbers suggest more price inflation down the road, which will support higher long-term gold. Add in the huge increase in global liquidity promised by the IMF, and a Fed report that U.S. factory output increased in December by the most in a year, and you have cause for returning risk appetite at home and abroad as investors exit the dollar for assets like gold and equities.