Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold added 0.4% to close above $1,203 as global economic jitters drove a sell-off on Wall Street, boosting demand for safe-havens. The metal inched down $1.50 an ounce for the week, breaking its streak of four straight weekly wins.

The Dow tumbled 1.7% and the Global Dow 1% in response to weak corporate earnings, generally weaker U.S. economic data, and new regulations in China design to reign in stock market speculation. All ten S&P 500 sectors lost ground as earnings missed forecasts.

In an attempt to cool China's red hot stock market, which has doubled in the past year, Chinese regulatory authorities lifted bans on short selling and issued warnings on margin trading. The move caused global traders to reposition portfolios in anticipation of a sell-off in Asian markets.

Worries about Greek solvency further stoked risk-aversion and supported higher gold prices. Reports that Greece will have to use all of its cash reserves to pay public salary and pensions at the end of the month, leaving nothing left for the IMF repayments required to qualify for additional aid, are causing European banks to anticipate default.

Yesterday, S&P downgraded Greek debt yet again on growing expectations that the broke nation will become insolvent and possibly exit the Eurozone. Yields on two-year Greek government bonds jumped 4% to more than 27% and ten-year bond yields rose to a two-year high near 13%.

The dollar rallied on safe-haven inflows because of Greece, capping golds gains. And slightly higher consumer inflation in March also buoyed the buck, perhaps easing the way toward higher interest rates. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive overseas.

The other precious metals were mixed on the day and week. Silver slipped 0.3% for a weekly loss of 0.9%. Platinum added 0.9% to finish the week virtually flat. Palladium gained 0.7% for a weekly rise of 1.2%.

At the Comex close: June gold gained $5.10 to $1,203.10; May silver slipped 5 cents to $16.23; July platinum added $10.30, to $1,170.60; and June palladium gained $5.75 to $785.50 an ounce.