Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Extending yesterday's rally, gold added 0.3% to close above $1,243 as soft U.S. data undermined the dollar, boosting demand for alternative stores of value.

Durable goods orders climbed 1.8% in March, much less than expected, signaling ongoing weakness in the U.S. factory sector. A proxy for business investment, orders for core capital goods, which exclude military and aircraft purchases, rose a meager 0.8% and were revised lower to negative 2.7% in February.

Combined with recent weakness in retail sales, consumer confidence, trade, and industrial production, the soft durable goods report suggests a major slowdown in economic growth in Q1. After expanding 1.4% to close out 2015, the economy has braked to around 0.3% in 2016, according to forecasts.

The dollar fell 0.3% against major rivals as traders speculate that the Fed, meeting today to plot monetary policy, will be less inclined to raise interest rates in coming meetings because of the weakening data. A falling dollar supports gold and other commodities denominated in it for international trade by making them less expensive overseas.

China's gold imports jumped in March, rising to 64.1 tonnes from 42.9 in February and 61.8 year earlier, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg. The increase was attributed to stronger investment demand as China's economy stabilizes and incomes rise.

In a bullish development for silver, mine production is forecast to fall for the first time since 2011 just as China's recovery is projected to boost industrial demand for the metal. The deficit should help silver build on its 24% gain so far this year. Like gold, which has gained 18% in 2016, silver has benefitted from expectations that the Fed will be slow to raise interest rates this year.

The other precious metals were mostly higher, with silver and platinum adding 0.6% and 0.2%, respectively, while palladium slipped 0.2%.

At the Comex close: June gold rose $3.20 to $1,243.40; May silver gained 10 cents to $17.11; July platinum added $1.60, to $1,020.10; and June palladium dipped $1.10 to $604.50 an ounce.