Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Washington— Building on last week's gains, gold rose 0.8% to close above $1,244 as traders took bullish positions ahead of this week's meeting of the Federal Reserve. After dipping as low as $1,233 early in the session on reports that U.S. industrial production rose in November, gold rebounded to as high as $1,252 later in the day, driven by a short-covering rally as the market began to price in the possibility that the Fed may elect not to taper this week. Bullish bets on higher gold prices, or net-long positions, among hedge funds and money managers rose for the first time in six weeks, according to Bloomberg. In a survey by CNBC, traders say gold may test $1,300 this month if the Fed does not announce reductions in monetary easing.

Gold was also helped by reports that eurozone factory output increased more than expected in December, strengthening the euro against the dollar, which fell broadly. A weaker dollar supports higher gold prices because, like most commodities, gold is denominated in dollars for international trade and becomes less expensive to holders of other currencies. Silver jumped 2.5% and palladium inched higher by less than 0.1% while platinum slipped 0.2%.

At the Comex close: February gold gained $9.80 to $1,244.4; March silver jumped 50 cents to $20.10; January platinum dropped $2.80 to $1,360.10; and March palladium added 15 cents, to $716.35 an ounce.