Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.4% in quiet, pre-holiday trade but still finished the week with a 1.6% gain behind a weaker dollar and falling global equities. Orders for U.S. durable goods rose by a surprising 3.3% in April after dropping 5.9% in March. The positive data pointed to a possible rebound in the second half of the year and added to concerns that the Fed may reduce quantitative easing in the near future. Tantamount to printing money, QE has helped gold to rise by nearly 60% since 2008 because it devalues the dollar and increases the risk of long-term inflation. It has also fueled record-high runs in the S&P 500 and Dow by flooding the markets with cheap money and encouraging risk-taking among investors.

Speculation that the Fed may curtail easing weighed on both gold and equities earlier in the week. Ben Bernanke sent mixed messages in his appearance before Congress, saying that easing at current levels is appropriate, but also that bond-buying could be stepped back if the economy improves sufficiently. Follow-up statements in support of monetary stimulus by regional Fed presidents John Williams and James Bullard, who said today that tapering QE won�t happen until inflation picks up, helped to assuage traders' fears and shift market sentiment back toward gold. Gold traders are now at their most bullish in a month, according to a Bloomberg survey.

Silver finished virtually flat today and gained 0.6% for the week. Platinum dropped 0.4% on the day and 1.1% on the week, while sister metal palladium fell 1.7% today and 1.9% this week. More closely tied to industry, the PMGs were knocked down by reports of economic slowdown in China.

At the Comex close: August gold slipped $5.30 to $1,387.50; July silver dipped closed 1 cent to $22.50;July platinum fell $5.30 to $1,451.90 and June palladium dropped $12.20 to $726.45 an ounce.