Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.6%, surrendering yesterday's gains and more to close under $1,242, after a strong U.S. growth report diminished safe-haven demand. Overcoming a government shutdown and widespread budget cuts, the U.S. economy grew 3.2% last quarter, boosted by solid increases in consumer spending and business investment. Risk-appetite rose on the upbeat news, driving the Dow 110 points higher and NASDAQ up by 1.7% despite a separate report indicating that existing homes sales plunged in December by the most in nearly four years.

The dollar rallied against most major rivals, supported by yesterday's Fed vote to deepen cuts in quantitative easing by $10 billion a month. Tantamount to printing money, QE has boosted prices for gold and other commodities by devaluing the dollar and raising the risk of long-term inflation. Commodities were also hit by confirmation that China's manufacturing sector contracted last month, signaling reduced demand for raw material in the world's second largest economy. The other precious metals tracked gold lower, with silver dropping 2.2% while platinum and palladium fell 1.8% and 0.6%, respectively.

At the Comex close: April gold fell $19.70 to $1,242.50; March silver lost 43 cents to $19.13; April platinum slid $25.80 to $1,382.30; and March palladium dropped $4.30 to $706.85 an ounce.