Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.7% to close below $1,309, the lowest since early August, as the likelihood of a Fed taper of monetary easing and a diplomatic solution to the Syria crisis diminished its appeal as an alternative store of value. Most traders expect the FOMC to announce a modest reduction in quantitative easing when it meets next week, perhaps dropping its bond-buys from $85 billion to $75 billion per month. Tantamount to printing money, QE has supported higher gold prices by undermining the value of the dollar and increasing the risk of long-term inflation. Reductions in QE are likely to bolster the dollar and weigh on dollar-denominated assets like gold and other commodities.

Gold rose above $1,420 in late August on fears that military conflict in Syria would disrupt oil supplies in the Middle East, causing a spike in oil prices and potentially undermining the global recovery. With President Obama tentatively accepting a Russian proposal to allow an international coalition to take possession of Syria's chemical weapons for dismantling and elimination, much of that safe-haven premium has now drained away, resulting in a loss of nearly 6% this week. Silver fell 1.9% for a weekly loss of over 9%. Platinum edged up 0.1% today but finished the week 3.4% lower. Palladium gained 0.9% on the day and 0.3% on the week.

At the Comex close: December gold fell $22 to $1,308.60; December dropped 43 cents to $21.72; October platinum edged up $1.80 to $1,444.50; and December palladium added $6.30, to $699.10 an ounce.