Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold edged up slightly as the dollar weakened after the Group of Seven industrialized nations issued a statement saying, essentially, that they will not target exchange rates with coordinated action. Gold suffered a 1.2% loss yesterday on concerns that G-7 governments would coordinate policies to prevent a global currency war, in which governments race to devalue their currencies in order to stimulate their economies and make their exports more attractively priced. Instead, the Group confimed its commitment to market-driven exchange rates, providing no coordinated action to support currencies. Precious metals gained on the weaker dollar and most equity indexes rallied. Silver added 0.4%, platinum gained 1.2%, and palladium jumped 1.7%.

At the Comex close: April gold edged up 50 cents to $1,649.60; March silver added 11 cents, to $31.02; April platinum gained $21.10 to $1,717.20; and March palladium jumped $12.80 to $771.40 an ounce.

In bullish news for gold, Federal Reserve Vice Chair Janet Yellen has voiced support for continued easing well beyond targets set by recent Fed policy. In its December statement, the FOMC said it will maintain near-zero interest rates until unemployment falls below 6.5%, as long as inflation stays below 2.5%. In a speech yesterday, Yellen, who is widely expected to succeed Ben Bernanke as Fed Chair, emphasized that rates may be held near-zero well past that unemployment threshold, "to make sure the market doesn�t want to get carried away" and boost rates to the detriment of growth and employment. Yellen's position is bullish for gold because negative real interest rates, in which rates remain below the CPI, make gold more attractive than most interest-bearing investments like bonds and CDs for beating inflation.