Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold inched up 0.1% in volatile trade to close above $1,223 as traders continue to weigh the question of when the Fed will taper monetary easing. The metal tumbled 2.3% to a five-month low yesterday after ISM data showed U.S. factory output hitting a 30-month high in October, adding support to the case for tapering later this month. The bearish sentiment spilled over into today's session, pushing gold as low as $1,215 before bargain-hunting and a short-covering rally bounced prices as high as $1,226 in intra-day trade. Gold was also supported by a broadly falling dollar, which makes precious metals and other commodities denominated in dollars less expensive for holders of other currencies.

The market will look toward Friday's release of the non-farm payrolls report for clues to the Fed's likely direction. Following this week's upbeat ISM report, strong jobs data could tip the FOMC toward scaling back its bond-buying program, known as quantitative easing, at its December meeting. However, most analysts still expect the taper to be delayed until next year, given persistently high unemployment and low inflation. Tantamount to printing money, QE has spurred higher prices for precious metals and equities by flooding the economy with liquidity, devaluing the dollar and increasing the risk of long-term inflation.

U.S. stocks ended lower for the third straight session, with the Dow losing nearly 1% to close under 16,000, pressured by uncertainty over the Fed's timing. Silver slid 0.6% while platinum gained 0.5% and palladium finished virtually flat.

At the Comex close: February gold inched up $1.50 to $1,223.40; March silver slid 12 cents to $19.16; January platinum gained $6, or 0.5%, to $1.353; and March palladium added 80 cents, to $714.20 an ounce.