Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.1% to close above $1,274 after oil surged on reports of a supply deficit and the dollar softened on weak U.S. data, boosting demand for alternative assets. The metal rose as high as $1,290 in intraday trade before succumbing to profit-taking.

Oil prices jumped more than 3% to a six-month high after Goldman Sachs reported that the market has fallen into a supply shortage for the first time in two years. Production disruptions in Venezuela, Canada, and Nigeria have helped drain off overcapacity, according to Goldman analysts, causing the investment bank to raise its target price for oil by 25% this quarter. Gold often trades in sympathy with oil as a hedge against energy-driven inflation.

Manufacturing in the New York Fed region fell last month as the Empire State index of general business conditions plunged deeply into the negative. The strong dollar and weak overseas demand continue to hammer manufacturing and exports, with orders and shipments both contracting.

The dollar weakened against most major rivals following the soft Empire survey as traders speculated that the Fed would be less inclined to raise rates in June. A weaker dollar typically supports gold and other commodities denominated in it for international trade by making them cheaper to foreign buyers.

The other precious metals were mixed, with silver adding o.1% while platinum and palladium slipped 0.1% and 0.2%, respectively.

At the Comex close: June gold gained $1.50 to $1,274.20; July silver added 2 cents, to $17.15; July platinum dipped $1.40 to $1,053.50; and June palladium slid $1.40 to $591 an ounce.