Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.3% in thin trade after published minutes from Fed's June meeting indicated no strong sentiment in favor of another round of quantitative easing. Earlier, gold had advanced 0.7% in London, driven by increased safe-haven demand for the metal in response to slowing global growth. But the release of the Fed minutes pushed the dollar index to a two-year high, drove 10-year Treasury yields to record lows, and suppressed the gold price. Stock markets also fell despite reports that China plans to stabilize its economy through increased public investment and domestic spending. Having more industrial applications than gold, the other precious metals rallied, with silver gaining 0.5%, platinum 0.1%, and palladium 1.1%

At the close: August gold dipped $4.10 to $1,575.70; August silver gained 14 cents to $27.02; October platinum picked up $1.90 to $1,431.60; and September palladium added $6.35 to $582.95 an ounce.

While no one really expected an explicit plan for new bond purchases to appear in these minutes, its lack nonetheless disappointed markets grown hungry for more monetary stimulus. Given the deterioration in the economic data since June 21, when the meeting was held, however, they might not have to wait much longer. The language of today's release is purposefully vague and cautious, but it suggests a growing bias on the FOMC towards doing more easing if necessary. As the minutes state: �A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the Committee�s goal,� while �several others� said it might be needed if the economy loses momentum, risks to growth get worse, or inflation looks set to remain below target. In other words, more members than before are open to more easing if data gets worse. Since then, payrolls have remained stagnant, inflation has receded slightly, and most other data has indicated a slowdown in the recovery. Plus, as we reported yesterday, more Fed members are being more outspoken about the need for more easing. Don�t count it out.