Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold climbed for the fifth straight session, closing at a three-week high above $1,274, as lower wholesale inflation and soft consumer sentiment in the U.S. combined with escalating violence in Iraq to spur investors toward alternative investments. The metal finished the week 1.7% higher for its second consecutive weekly win.

Consumer sentiment slipped in June and producer's prices contracted in May, their first dip in three months, indicating slower growth and lower demand for goods. Falling inflation is likely to mean near-zero interest rates until well into next year as the Fed struggles to meet its target of 2% to 2.5%. Negative real interest rates are supportive for gold as investors eschew cash and bonds for higher returns.

Islamist militants overran two more towns in Northern Iraq as that nation careens toward civil war. Oil rose again to close above $106 per barrel, , notching a weekly gain of 4.1%, its biggest of the year, on concerns that the hostilities will disrupt supplies.

The other precious metals were mixed, with silver climbing 0.6% for a weekly gain of 3.5%. Platinum and palladium fell again, losing 0.4% and 0.8%, respectively, after yesterday's tentative labor accord in South Africa signaled the end of a damaging five-month strike. Both PMGs were down slightly for the week.

At the Comex close: August gold edged up 10 cents to $1,274.10; July silver added 12 cents, to $19.655; July platinum slid $6.30 to $1,435; and September palladium dropped $6.80 to $812.60 an ounce.