Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.2%, extending yesterday's losses, on fears that the Fed may signal a slowdown in quantitative easing during this week's meeting of the FOMC. While few economists expect any substantive changes in monetary policy, gold traders nonetheless positioned themselves for lower prices in case the Fed's language in tomorrow's press conference indicates a preference to taper. QE has helped gold to rise by more than 60% since 2008 because it devalues the dollar and increases the risk of long-term inflation. The dollar rose on the possibility of reduced easing, further pressuring gold.

In a sign of market confusion, equities took the opposite tack, rising on expectation that the Fed will quell fears of tapering. The Dow added 0.8% and the S&P 500 gained 0.9%, pulling safe-haven interest away from gold. Today's consumer inflation report showing the CPI rising a scant 0.1% in May was seen as reducing pressure on the Fed to taper easing. The other precious metals were mixed, with silver dropping 0.4% and palladium, because of falling European auto demand, tumbling 1.3%. Only platinum bucked the trend, gaining 0.4%

At the Comex close: August gold fell $16.20 to $1,366.90; July silver lost 8 cents to $21.68; July platinum rose $5.30 to $1,440.10; and September palladium tumbled $9.50 to $708.35 an ounce.