Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Building on yesterday's 1.1% rise, gold added another 0.5% to close above $1,193 as a weaker dollar and falling equities boosted demand for alternative assets.

The U.S. trade deficit surged in March, the Commerce Department said today, with exports falling short of imports by more than 43%, the most in six years. The unexpectedly large gap underscores a detrimental effect of the strong dollar: foreign goods are cheaper here while U.S. goods are more expensive overseas, making them less competitive. In light of the trade data, revisions to GDP are expected to show a modest contraction in the first quarter instead of the 0.2% expansion previously forecast.

On the positive side, the ISM reported that the U.S. services sector expanded in April, suggesting that growth might rebound in the second quarter. U.S. and global equities retreated nonetheless, with the Dow and Global Dow both losing 0.8% while the S&P 500 surrendered 1.2%

The dollar fell against major rivals on the trade data, dropping from a three-week high against the yen and a one-week high against the euro, as traders speculate that the Fed will be unable to raise interest rates before September.

Gold was further supported by new concerns about Greece's solvency after the IMF warned that it may withhold bailout funds because the Greek debt-burden remains unsustainable. The cash-strapped nation faces a debt repayment of more than $800 million to the IMF next week, which it cannot meet without a new tranche of aid. The IMF will only float the funds if the EU agrees to write down Greece's debt, something it has steadfastly refused to do without additional fiscal reforms from the anti-austerity government of Alexis Tsipras.

The other precious metals were general higher, with silver and palladium picking up 0.8% and 1.6%, respectively, while outlier platinum slipped 0.2%.

At the Comex close: June gold gained $6.40 to $1,193.20; July silver rose 14 cents to $16.58; July platinum slipped $2.10 to $1,148.80; and June palladium added $12.30, to $794.95 an ounce.