Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold edged up slightly for its fourth straight winning session, holding above $1,225 as another round of weak U.S data pressured the dollar and diminished the chances of a rate hike from the Fed anytime soon. The metal finished at a three-month high after gaining 3.1% this week.

U.S consumer sentiment plunged this month, according to the University of Michigan index, hitting its lowest level since last October as Americans in all regions become increasingly pessimistic about job prospects and economic growth. A separate report showed national factory output stalling in April, despite an uptick in the New York Fed region, while overall industrial production fell for a fifth straight month.

Following recent reports showing weak retail sales, falling wholesale inflation, and uneven gains in employment, the new data is further damping hopes that Q2 will present a significant rebound in the economy after Q1's abysmal growth of just 0.2%.

The ICE Dollar Index fell again, posting its fifth-straight losing week, as speculation deepens that the Fed will be unable to raise interest rates until late this year. A weaker dollar supports higher prices for gold and other commodities denominated in it for international trade.

The World Gold Council reports that India's gold imports surpassed 100 tonnes for the second straight quarter, signaling a rebound in demand in the world's second biggest gold-consuming nation. China recently overtook India as the biggest gold buyer, but the positions are likely to reverse again this year as Indian demand accelerates, according to the WGC.

Investment guru Peter Schiff, CEO of Euro Pacific Capital and a consistent gold bull, reiterated his forecast that gold will rise to $5,000 or higher "in the next couple of years" because of global monetary easing. With economic data at home and abroad getting weaker, central banks will be force to print yet more money, Schiff says, which is tantamount to "putting fire out with gasoline." The effect will be a radical devaluation of paper currencies, driving investors into gold.

The other precious metals were higher on the day but mixed for the week. Silver gained 0.6% for an impressively weekly rise of 6.7%. Platinum also picked up 0.6%, gaining 2.2% this week. Palladium recouped 2% but finished the week down 0.2%.

At Comex close: June edged up 10 cents to $1,225.30; July silver gained 10 cents to $17.56; July platinum picked up $6.70 to $1,169.10; and June palladium jumped $15.45 to $794.95 an ounce.