Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold inched up, adding slightly to yesterday's 2.2% rally following the Federal Reserve's announcement of unlimited quantitative easing. Global risk appetite is snowballing as investors foresee a new flood of cheap dollars entering the markets. Commodities rose, the Dow added another 50 points, and European equities rallied to 15-month high while the dollar fell for a fourth session and Treasury prices dropped by the most since March. The Consumer Prices Index rose in August by the most since June 2009, adding support to gold's traditional role as an inflation-hedge. Silver slipped 0.4%, which was unsurprising after yesterday's stunning 4.5% gain. Platinum jumped another 2% for its eleventh straight winning session, its longest rally since 1987, behind ongoing strikes in South African mines. Sister metal palladium added 1.5%.

At the close: December gold added 60 cents to $1,772.70; December silver dipped 12 cents to $34.66; October platinum jumped $34.20 to $1,713.70; and December palladium picked up $10.30, to $699.30 an ounce.

The fact that gold did not consolidate lower after yesterday's huge rally is a good indication of its strong support in the current market environment. Because it trades uniquely as both a safe-haven currency and a commodity, gold is positioned to gather inflows from both roles at once. QE3 and near-zero interest rates into 2015 will further undermine the dollar, adding to gold's attraction as an alternative currency. And stimulus from Europe, China, and the U.S. should help to revive the global economy to recover, driving demand for commodities and increasing gold prices. Add soaring demand from central banks as governments increase their reserve-holdings and the fundamentals are solidly in place for the next upswing in gold's long bull market.