Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— With U.S. markets closed for Presidents Day, gold edged up by 0.1% in electronic trade as physical demand returned in Asia. Volume on the Shanghai Gold Exchange exceeded 22 metric tons for the first time ever as markets reopened after a week-long closure for the Lunar New Year. Demand for physical bullion in China and India�from individual investors, jewelry fabricators, and central banks�is expected to increase by 13% and 11% this year, respectively, according to a World Gold Council report published last week, and help to underpin the gold price. In European trading, silver picked up 0.2% while platinum and palladium jumped by 1% and 0.8%, respectively, on supply concerns after violent clashes at South African mines.

At the closes: April gold edged up 2.10 to 1,611.60; March silver added 7 cents to $29.92; April platinum jumped $17.50 to $1,695.20; and March palladium gained $6.10 to $759.25 an ounce.

Consolidating after last Friday's 1.6% tumble triggered by reports that billionaire investor George Soros had cut his position in gold-baked ETFs by 55% last quarter, the U.S. gold market is awaiting Wednesday's release of the minutes of last FOMC meeting for new signs of the Fed's disposition toward quantitative easing. Although both Fed Chair Ben Bernanke and Vice Chair Janet Yellen, who is widely expected to succeed Bernanke, forcefully defended the continuation of easing in speeches just last week, any indications of growing dissent among other Fed members could dim gold's near-term outlook. Easing boosts higher gold prices by devaluing the dollar and increasing the risk of long-term inflation.

On the other hand, gold should see safe-haven support this week from increasing concerns that Congress, if unable to reach a budget agreement by March 1, will trigger the $85 billion in automatic spending cuts known as the "sequester." JP Morgan has lowered its GDP forecast for 2013 from 2.1% to 1.9% on the growing likelihood that the cuts will happen, and will damage the economy.