Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.3% in choppy trade, closing just above $1,197, as apparent relief from the Greek debt crisis outweighed dovish signals from Janet Yellen about U.S. interest rates, reducing safe-haven demand.

Greece's troika of lenders�the EU, IMF and ECB–approved its bailout extension today by accepting the new government's reform proposals. The struggling nation will receive an additional four months of aid, preventing its default and exit from the euro for the time being. The individual member states of the Eurozone will now have to ratify the deal.

After skidding as low as $1,190 in intraday trade when the Greek plan was accepted, gold quickly rebounded to as high as $1,204 as Fed Chair Janet Yellen testified on monetary policy before Congress. Yellen stated that inflation and wage growth remain too low despite improvements in the job market, emphasizing that the Fed will remain flexible and not lock into a timetable for raising interest rates.

The dollar quickly tumbled on Yellen's testimony while Treasury bonds rallied on speculation that rates will remain near zero until late this year. Lower rates support higher prices for gold and other commodities by weakening the dollar.

Gold was also supported by reports that U.S. consumer confidence fell in January, dragged down by pessimism about ongoing job market health and business prospects in coming months. Consumer spending accounts for nearly 70% of GDP.

The IMF reported that the central banks of Kazakhstan and the Ukraine increased their gold reserves last month, while Russia trimmed its holdings slightly after nine straight months of increases. Central banks have been net buyers of gold for five consecutive years, adding more than 470 tonnes last year, and are expected to buy another 400 tons this year to offset rising currency risk.

The other precious metals were mixed, with silver and platinum slipping 0.4% and less than 0.1%, respectively, while palladium added 0.6%.

At the Comex close: April gold dipped $3.50 to $1,197.30; March silver lost 6 cents to $16.19; April platinum dipped 30 cents to $1,162.60; and March palladium added $4.05 to $790.