Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.1% after a weak Spanish debt auction and slower ADP payrolls growth in the U.S. rallied the dollar. Spain's debt-sale fell short of expectations today, reminding investors that the eurozone debt crisis is far from over despite some positive recent headlines. If its borrowing costs cannot be lowered by market demand, Spain will be forced to ask the ECB to launch its QE-styled program of bond purchases known as Outright Monetary Transactions (OMTs). The euro fell on the news while the dollar gained, pressuring the gold price. In the short term, OMTs are likely to weigh on both the euro and gold by boosting the dollar. In the longer-term, however, they should support demand for gold as a hedge against currency devaluation. The other metals gained, with silver up 0.5%, platinum 0.1%, and palladium 0.7%.

At the Comex close: February gold dipped $2 to $1,693.80; March silver added 15 cents, to $32.96 ; January platinum edged up $1.30 to $1,584.20; and March palladium gained $4.75 to $687.45 an ounce.

Gold also saw some fund liquidations today after Goldman Sachs lowered its forecast for 2013, saying the bull market may stall as improving U.S. growth prompts the Fed to curtail QE3. Despite pullbacks in the paper-gold market, physical demand for bullion remains strong. Holdings in SPDR Gold Trust, the world's largest gold-backed ETF, increased by 2.4 tonnes yesterday to a new record high, according to Reuters. The U.S. Mint reported its highest November sales of gold bullion coins in fourteen years. And Central Banks continue to buy gold on the dips. South Korea increased its gold reserves by 20%, buying 14 tonnes last month. Central Banks bought a record 456 tonnes last year in order to diversify currency risk. They're on pace to surpass that amount this year, according to the World Gold Council.