Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold jumped 1.6% to close at a two-week high above $1,106 as plunging oil triggered a rout in global equities, boosting demand for safe-haven assets.

Extending their relentless slide, oil prices plunged nearly 7% to a fresh 12-year low under $27 per barrel, eroded by deepening concerns over surplus supply and falling demand. The pending release of Iranian production into an already-glutted market weighed further on sentiment.

Equities fell sharply as fear gripped the markets, with the Dow dumping 2.4%, the Global Dow surrendering 3%, and the S&P 500 plunging to the lowest level in nearly two years. U.S. Treasury bonds rallied alongside gold on flights to safety.

The dollar rolled back against major rivals after the BLS reported that consumer inflation fell in December, diminishing expectations that the Fed will raise interest rates again in March. In light of slowing global growth, deepening market turmoil, and reduced expectations for inflation, many economists now foresee one rate hike this year, down from the four previously forecast.

The other precious metals were mixed. Silver added 0.3% to yesterday's 1.6% rise while platinum and palladium, more directly tied to industry, lost 1.3% and 1.6%, respectively.

At the Comex close: February gold jumped $17.10 to $1,106.20; March silver added 4 cents, to $14.16; April platinum dropped $11.10 to $819.20; and March palladium lost $7.90 to $489 an ounce.