Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold finished virtually flat, dipping 30 cents at the close before adding a dollar after hours, as traders hedged their bets ahead of tomorrow's two-day meeting of the Federal Reserve. Near-universal sentiment holds that the Fed will maintain quantitative easing at its current rate of $85 billion per month. Tantamount to printing money, QE devalues the dollar by flooding the economy with cheap liquidity in order to drive down interest rates and stimulate consumption. It also boosts demand for gold as an alternative store of value and hedge against the risk of long-term inflation.

Today's release of weak economic data reinforced the view that the recovery is still too fragile to remove stimulus. Factory production rose less than forecast in September and pending home sales plunged 5.3%, the largest drop in more than three years. These reports followed Friday's data showing consumer sentiment at its lowest in a year. With the U.S. economy well-below its full potential and Janet Yellen, a renowned dove on monetary policy, poised to replace Ben Bernanke at the helm of the Fed in January, stimulus is expected to continue unabated until March of next year or longer, which is bullish for gold.

The other metals were mixed, with silver dropping 0.5% while platinum and palladium added 1.2% and 0.3% respectively.

At the Comex close: December gold dipped 30 cents to $1,352.20; December silver slid 10 cents to $22.54; January platinum climbed $17.40 to $1,472.90; and January palladium added $2.55, to $750.45 an ounce.