Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold futures fell 1.3%, plunging to their lowest level since August, after upbeat economic reports triggered a technical sell-off. The U.S. economy grew at a 3.1% annual rate in the third quarter, its fastest pace in three years and more than twice the previous quarter. And manufacturing in the Philadelphia region jumped unexpectedly to an eight-month high. The news spurred heavy liquidations by hedge funds, which read the GDP report as a sign that the Fed may curtail quantitative easing and rasie interest rates sooner than previously thought. Once gold broke below its 200-day moving average near $1,668, it triggered a heavy concentration of put-options, adding to downward momentum, until it held support at $1,636 and rebounded back above $1,649, where it remains technically oversold. Silver futures fell even harder, dropping 4.6% to close under $30 for the first time since late August. Platinum and palladium lost 2.9% and 2.6%, respectively.

At the Comex close: February gold fell $21.80 to $1,645.90; March silver plunged $1.44, to $29.68; January platinum sank $46.70 to $1,546.20; and March palladium shed $18.10, to $680.25 an ounce.

Despite this week's weakness in paper gold, demand for gold bullion remains very strong. Holdings in gold-backed ETPs increased to a record 2,631 tonnes yesterday, according to data tracked by Bloomberg, expanding by more than 12% this year.