Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.6%, but still finished the week 2.2% higher, as traders took profits from another strong week and hedged their bets ahead of next week's central bank meetings. On Wednesday and Thursday, the Fed will review monetary policy and consider whether to step back the pace of quantitative easing, its program of buying $85 billion in bonds each month to stimulate the economy and reduce unemployment. The ECB and Bank of England also meet next week to decide the direction of interest rates. While unlikely, announcements of reduced QE and higher rates in Europe and the U.K. would lift the dollar and pressure gold. Signaling their uncertainty over central bank direction, traders played it safe today by cutting long positions on both gold and the dollar, driving them lower.

Despite reports that U.S. consumer sentiment hit a six-year high in July, the economic data in recent weeks has been mixed enough to lead most economists to believe the taper won't begin until after September. Fed Chair Bernanke told the Senate Banking Committee recently that it was "way too early" to decide whether to reduce easing in September, let alone next week, citing slower economic growth and weakness in the labor market. Bernanke's dovish stance has weakened the dollar and helped rally gold to three straight weeks of gains for the first time since March..

The other metals followed gold lower. Silver lost 1.9% but still gained 1.6% for the week. Platinum dropped 1.7% today, finishing the week down 0.6%. Palladium tumbled 2.3% today and 3% this week.

At the Comex close: December gold fell $7.60 to $1,321.90; September silver lost 38 cents to19.77; October platinum shed $25.10 to $1,422.80; and September palladium tumbled $16.75 to $724 an ounce.