Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending yesterday's 0.7% rise, gold added another 0.8% to close above $1,778 as residual concerns about a possible Evergrande default combined with a weaker dollar to spur demand for alternative assets.

Anxiety about the fate of China's second-largest property developer subsided somewhat today after its CEO reassured the markets that deeply leveraged Evergrande will not default on its $300 billion in outstanding debt.

However, worries remain that an Evergrande collapse could trigger global debt contagion like the fall of Lehman Bros in 2008.

Equity markets struggled to recover from yesterday's dramatic selloff with the Dow, Global Dow, and S&P 500 all bouncing between small gains and losses. Treasury yields edged slightly higher in choppy bond trading as investors tempered risk appetite with desire for safety.

Supporting gold's rise, the dollar fell from a one-month high, in part on the belief, perhaps mistaken, that Beijing will step in to recapitalize the struggling giant. A weaker dollar tends to lift gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

Gold was also helped by defensive positioning among traders who speculate that the outcome of the Fed's two-day meeting, which begins today, may be less hawkish than the market has anticipated. Expectations that the central bank may signal a tapering of bond purchases, if not actually announce it, have weighed on the metal in recent weeks by lifting the dollar.

The other precious were also higher, with silver rising 1.8% while platinum and palladium climbed 5.7% and 1.6%, respectively.

At the Comex close: December gold gained $14.40 to $1,778.20; December silver added 41 cents, to $22.61; October platinum picked up $51.60 to $950.80; and December palladium climbed $21.20 to $1,894.50 an ounce.