Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austiin— Gold gained 1% to close near $1,292 as surprisingly poor U.S. durable goods data weakened the dollar, hammered equities, and increased demand for alternative stores of value.

Falling for the fourth month in the last five, orders for long-lasting manufactured goods declined by whopping 3.4% in December, the biggest drop since August. The broad-based weakness was attributed to slackening demand in Europe and emerging markets. It signals that slower growth for the U.S. economy is likely in the first quarter of 2015.

U.S. equities tumbled on the weak data, with the Dow surrendering nearly 300 points, or 1.7%, while the S&P 500 lost 1.3%. The losses came despite reports that consumer confidence rose by more than expected in January to the highest level since 2007. However, business investment fell in December for the fourth straight month.

The dollar lost 1% against major rivals on speculation that softer data, slowing global growth, and falling inflation will prompt the Fed to postpone raising interest rates until later than expected. A falling dollar supports higher prices for gold and other commodities denominated in it for international trade by making them less expensive to foreign buyers.

Economists at Morgan Stanley today forecast no rate hikes until March 2016, long after the mid-2015 dates mentioned by many analysts. The Fed meets this week to review monetary policy.

Hedge funds are now at their most bullish toward gold in more than two years. Bets on higher prices to come, so-called long positions, jumped by 20% last week while short positions fell. Bullish positions rose by a net 27%, to the biggest total since 2012, when gold was priced over $1700 an ounce. Global turmoil, slower growth, and the explosion of monetary easing by central banks are contributing factors.

The U.S. Mint reports silver bullion sales have risen to a three-month high, with demand being driven by concerns that Europe's economic woes will affect the U.S. The Mint has sold more than 5 million one-ounce silver Eagles so far this month, the most since October and slightly more than Last January. Silver has gained 19% in 2015.

The other precious metals were mostly higher. Silver picked up 0.5% and platinum and gained 0.7% while outlier palladium, most heavily tied to industry, dipped 0.1%.

At the Comex close: February gold gained $12.30 to $1,291.7; March silver picked up 10 cents to $18.08; April platinum rose $9.30 to $1,264.30; March palladium dipped $1.10 to $780.75 an ounce.