Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.4% on rising commodity demand as the Comex trading desk reopened in New York in the aftermath of hurricane Sandy. The S&P GSCI index of commodities rose to a one-week high, driven by eurozone optimism. EU ministers discussed the possibility of granting Greece an extension on reaching its fiscal targets, increasing its chances of remaining within the euro. And Spain posted its second current account surplus in the euro�s history, spurring foreign investment to increase for the first time this year. Gold rallied to above $1,726 on the news before falling back as the dollar erased early losses. The other metals outpaced gold, with silver rising 1.6%, platinum 1.5%, and palladium 2.3%

At the Comex close: December gold gained $7 to $1,719.10; December silver added 50 cents to $32.32; December platinum rose by $23.40 to $1,577.50; and January palladium rallied $13.65 to $609.80 an ounce.

Also supporting higher gold, Minneapolis Fed president Narayana Kocherlakota, an influential voice on policy, said yesterday that the Fed may need to ease further in order to stabilize prices and lower unemployment. Generally considered an inflation-hawk, Kocherlakota called for monetary tightening as recently as last June. Now he thinks the Fed's inflation forecasts of under 2% warrant further policy accommodations: "Given how high unemployment is expected to remain over the next few years," he said in a speech at the University of Minnesota, "these inflation forecasts suggest that monetary policy is, if anything, too tight, not too easy." In his view, QE3 and near-zero interest rates should continue until unemployment falls below 5.5%. Under QE1 and QE2, gold rallied by 85% because of dollar devaluation and the increased risk of long-term inflation.