Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1% to close under $1,251 as a rebound in global equities reduced the metal's safe-haven appeal. The Dow and Global Dow each rallied around a half-percent s after an surprising increase in U.S. consumer confidence stoked risk appetite. The Conference Board's index of consumer confidence hit a five-month high in January, fueled by growing optimism about jobs and improving business conditions. Consumer spending comprises around 69% of the economy. The report offset data that U.S. durable goods orders fell unexpectedly in December.

The dollar edged up against most major rivals, further pressuring gold and other commodities that are denominated in the U.S. currency for international trade. In addition to the surprising rise consumer optimism, the dollar was supported by expectations that the Fed will cut quantitative easing by another $10 billion per month during the two-day FOMC meeting that starts today. Tantamount to printing money, QE has contributed to higher gold prices by devaluing to the dollar and increasing the risk of long-term inflation.

The other precious metals followed gold lower, with silver dropping 1.5% while platinum and palladium both declined 0.8%.

At the Comex close: February gold fell $12.60 to $1,250.80; March silver shed 29 cents to $19.50; April platinum lost $11.70 to $1,409.40; and March palladium gave up $6.05 to $716.50 an ounce.