Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dropped 1.3% to close at a one-week low below $1,449 as eurozone optimism and rallying equities diminished its safe-haven appeal. Factory orders in Germany, the region's largest economy and engine of growth, jumped unexpectedly for the second straight month, fueling hopes that Europe may be poised for a moderate recovery. European equities rallied on the news with the Stoxx Europe 600 index closing at the highest level since June 2008. U.S. stocks also rallied, with the Dow reclaiming 15,000, as additional global stimulus increased risk appetite. Australia announced a rate cut to spur its flagging economy, following deeper easing measures by Europe, Japan, the U.S., and possibly China. The other precious also lost ground with silver dropping 0.6%, platinum 1.8%, and palladium 2.4%.

At the Comex close: June gold dropped $19.20 to $1,448.80; July silver for slipped 15 cents to $23.81; July platinum lost $26.50 to $1,481.20; and June palladium fell $16.50, to $680.60 an ounce.

Holdings in paper gold products like ETFs continue have declined by 12% so far this year as traders and short-term investors shift heavily into equities. Physical gold demand continues to build, however, with long-term investors taking full advantage of lower prices, especially in Asia. Gold consumption in China jumped 26% in the first quarter on rising demand for bullion and jewelry�and that was before April's huge price drop. Purchases of gold bars jumped 49% and jewelry 16% compared to a year ago. Golf imports by China from Hong Kong more than doubled to more than 223 tons in March alone, an all-time high; and retail demand more than tripled in April following the price drop.