Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.2%, closing at $1,239, as bargain-hunting and upbeat U.S. economic data sparked a rebound in equities, reducing demand for alternative assets. The metal finished the week 1.4% higher, scoring its second straight weekly win on expectations that the Fed will delay tightening monetary policy because of weak inflation and softness in the global economy.

U.S. equities rebounded after heavy losses this week, with the Dow picking up 1.7% after seven down days and the S&P 500 rising 1.4%, as improved corporate earnings combined with expectations of further Fed stimulus to lure bargain-hunters back to the markets. Housing starts rose in September and consumer sentiment jumped to a seven-year high in October, according to the Thomson Reuters survey.

Gold was supported by St. Louis Fed President James Bullard's statement yesterday that the central bank should consider delaying the end of quantitative easing in order to combat declining inflation. U.S. producer prices fell last month for the first time in a year, raising the specter of deflation. QE is expected to end in December after adding $3.5 trillion to the Fed's balance sheet since 2008. Tantamount to printing money, it supports higher prices for gold and equities by increasing liquidity, weakening the dollar, and stimulating long-term infaltion. Bullard added that the Fed could even ramp QE back up if inflation falls further.

Business Monitor International reported today that China's gold production will fall substantially by 2018 because of depleted reserves, higher mining costs, and lower ore quality. The world's most populace nation, China is also biggest gold producer and gold consumer. Lower future production will require substantial increases in Chinese gold imports to meet growing demand, supporting higher gold prices.

The other precious metals were mixed. Silver slid 0.6% but closed the week 0.2% higher. Platinum gained 0.6% today for a weekly rise of just 0.1%. Palladium jumped 1.5% today and 3.6% this week.

At the Comex close: December gold dipped $2.20 to $1,239; December silver slid 11 cents to $17.33; January platinum added $9.90, to $1,259.80; and December palladium gained $11.30 to $753.30 an ounce.