Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.3% as prospects for additional monetary stimulus in China boosted demand for the metal as an inflation hedge. China's services sector, which accounts for almost half of GDP, slowed sharply in April to its lowest level in nearly two years. Following separate reports last week showing diminished growth in Chinese manufacturing, the soft services data is more yet evidence that recovery in world's second-largest economy is at risk. Expectations are growing that China will further loosen its monetary policy in order to boost exports and domestic demand, following unprecedented monetary easing in Japan, Europe, and the U.S. Easing devalues currencies and raises the risk of long-term inflation, stimulating demand for gold as an alternative store of value.

Gold received additional support from growing Middle East tensions after Israel reportedly bombed targets in Syria in order to prevent Iranian weapons from falling into the hands of Hezbollah. Any escalation in that conflict is likely to boost gold further. And physical demand for gold continues to be strong, especially in Asia, as Chinese buyers returned to re-opened markets after holiday closure for much of last week because of May Day celebrations. Silver slipped 0.3% while platinum and palladium rose by 0.4% and 0.6%, respectively.

At the Comex close: June gold gained $3.80 to $1,468; July silver dropped 6 cents to $23.96; July platinum added $6.50, to $1,507.70; and June palladium picked up $3.80 to $697.10 an ounce.