Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold rose 0.4% to close at $1,196 as falling equities, rising inflation, and political uncertainty surrounding Donald Trump stoked safe-haven demand.

The Dow fell under 20,000, losing 0.8% on track its worst day in more than three months, as traders reacted to President Trump's controversial ban on immigration from seven Muslim nations. The uncertain legality of the executive order and its ramifications for trade and foreign relations squelched risk appetite despite signs of growth in the economy, including a solid uptick in consumer spending in December.

Trump's first two weeks as President, featuring a series of rapid-fire executive orders aimed largely at undoing the Obama era, have delivered the disruption he promised. The CBOE Volatility Index jumped 18% to a five-month high. Known as the "fear index," it measures Wall Street expectations for large swings in the S&P 500.

Rising inflation in the U.S. and abroad is also supporting gold. The PCE inflation index, the Fed's preferred measure, rose 0.2% in December and 1.6% for the year. It was the fastest 12-month acceleration in more than two years.

Inflation hit a three-year high in Germany and rose to 3% in the UK, while China's wholesale inflation surged in December by the most in five years. The increases were moistly fueled by rising oil prices. Gold is often purchased as a hedge against inflation.

The other precious metals were mostly higher, with silver and platinum adding 0.1% and 1%, respectively, while palladium dipped less than 0.1%.

At the Comex close: April gold gained $4.90 to $1,196; March silver added 2 cents, $17.15; April platinum picked up $10.20 to $993.50; and March palladium slid 15 cents to $738.45 an ounce.