Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold closed 0.1% lower as risk appetite took a pause after last week's stimulus-led rallies. With more than $1.4 trillion flowing into global equities following the Fed's announcement of unlimited QE3, mild consolidations are not unexpected. The Dow slipped 40 points and European stocks retreated by 0.3% from 15-month highs while the dollar rallied, pressuring gold. Oil tumbled nearly 3% from last week's rise over $100 per barrel as turmoil in the Middle East prompted talk of tapping the strategic oil reserve to pre-empt possible supply disruptions. After picking up nearly 2% last week, gold has held almost all of those gains, which is a very positive sign. Silver dropped 0.8% while sister metals platinum and palladium fell 2.4% and 1.5%, respectively.

At the close: December gold slipped $2.10 to $1,770.60; December silver dropped 29 cents to $34.37; October platinum fell $41.10 to $1,672.60; and December palladium slid $10.20 to $689.10 an ounce.

Despite today's dip, hedge funds and investment banks are increasingly bullish on gold and commodities. Net-long positions across 18 commodities futures rose to a 16-month high, according to Bloomberg, and bets on higher gold prices jumped by 14% to their highest since last February. And this data was collected before the Fed's announcement last week. With unlimited QE3 in the pipeline, the argument for higher inflation�and therefore higher gold�has gotten much stronger. As Bloomberg TV's Alix Steel reported today, Commerzbank and TD Securities have both raised their target price for gold to $2,000 by January, and Bank of America is now projecting an ultimate high of $3,000.