Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold edged lower by 0.1% as a flurry of mediocre U.S. economic data caused fund managers to seek liquidity. GDP for the first quarter was revised down to 1.9% from 2.2%. The Chicago PMI tumbled to its lowest point since September 2009, despite expectations that it would rise in May. The pace of hiring for private sector jobs continued its sharp second-quarter deceleration, according to ADP, while both weekly and monthly jobless claims rose again, according to Labor Department. U.S. and global equities fell again and oil plummeted 1.5%. Silver dropped 0.8% while platinum and palladium rose 1.2% and 1.4%, respectively.

At the close: August gold fell $1.50 to $1,564.20; July silver dropped 22 cents to $27.76; July platinum added $16.40 to settle at $1,417.60; and June palladium rose $8.45 to $613.15 an ounce.

While today's economic reports show a slowing economy, only the Chicago PMI report is truly recessionary. May was the third straight month of decreasing business activity in the Midwest. As the compilers of the report noted, three months of falling Chicago PMI numbers preceded the last seven U.S. recessions by six to eight months. Zero Hedge thinks this sharp downtrend in business activity means another round of quantitative easing (QE3) is now assured.

Certainly, the question of whether to ease or not to ease is much on the minds of Fed officials. Boston Fed President Eric Rosen directly called for it in a speech today, saying "further monetary accommodation is both appropriate and necessary" because of high unemployment. Richard Fisher of the Dallas Fed, an inflation-hawk, took the opposite tack in a separate speech, saying "I don�t see what we would accomplish by further easing." And the New York Fed's William Dudley left the door open by saying that higher unemployment, increased risks to growth, and rising deflationary pressures "could tilt the balance toward additional easing." In light of today's soft data and the deepening debacle in eurozone, tomorrow's monthly non-farms payrolls report could go far toward tilting the balance one way or the other.