Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold jumped 1.2% to close at a five-week high over $1,350 on bets that additional monetary stimulus will spur demand for the metal as a store of value. U.S. jobless claims fell less than expected last week, adding to speculation that the Fed will continue quantitative easing at its current pace of $85 billion per month until well into next year. Treasury yields dropped on the easing view and the dollar fell to a two-year low against the euro, supporting higher prices for gold and other commodities that are denominated in dollars internationally.

With the Fed set to maintain rather than withdraw easing, other central bankers are preparing to follow suit, in part to keep their currencies from appreciating too much against the dollar, which would make their exports less competitive. Canada, Sweden, Norway, and the Philippines have signaled their intention to keep low rates on hold, and the ECB and Bank of Japan are widely expected to add fresh stimulus to their economies, according to Bloomberg. Global easing devalues currencies and stokes demand for gold as an inflation hedge.

Reports from HSBC that China's manufacturing sector extended its rebound in October were also bullish for gold, helping to push the price past its 50-day moving average at $1,345. China is the world's leading gold consumer, recently overtaking India. The other metals followed gold, with silver adding 0.9% while platinum and palladium gained 1.2% and 0.2%, respectively.

At the Comex close: December gold jumped$16.30 to $1,350.30; December silver gained 21 cents to $22.82; January platinum climbed $16.60 to $1,456.20; and December palladium added $1.70, to $747.80 an ounce.