Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Unable to hold Friday's 1.1% gain, gold dropped 2.3% to close just under $1,221, the lowest since early July, as strong U.S and global data curbed demand for safe havens. The ISM gauge of U.S. factory output jumped to a 30-month high in October and U.S. construction spending rose to the highest level in more than four years, increasing speculation the Federal Reserve may begin to taper quantitative easing at its December meeting.

Better data out of China and Europe added to investor sentiment that the global recovery is gaining traction. China's PMI report showed manufacturing growth beating expectations in the world's second-largest economy. And eurozone factory output surpassed forecasts, reaching a 30-month high in November.

The strong economic reports helped to rally the dollar against major rivals, pressuring gold and driving Treasury yields to a 10-week high. U.S. and global stock indexes were also pulled lower by anticipation of a December taper by the Fed. Tantamount to printing money, QE has spurred higher prices for precious metals and equities by flooding the economy with liquidity, devaluing the dollar and increasing the risk of long-term inflation. Silver fell harder than gold, losing 3.7%, while platinum and palladium dropped 1.6% and 0.9%, respectively.

At the Comex close: February gold dropped $28.50 to $1,221.90; March lost 74 cents to $19.29; January platinum shed $22 to $1,346.80; and March palladium slid $6.25 to $713.40 an ounce.