Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold finished virtually flat, closing just under $1,325 in light trade, as the dollar rebounded mildly against most rivals. The Swiss franc, yen, UK pound, and euro all fell after the IMF cut its growth forecast and warned of downside risks building in the global economy.

A stronger dollar pressures gold because the metal is denominated in dollars internationally and becomes more expensive to holders of other currencies. Prospects for further dollar-strength are limited, however, as the Fed is likely to maintain quantitative easing at current levels until it can fully assess the economic consequences of the U.S. government shutdown, now in its eight day, and the pending debt-ceiling impasse. Tantamount to printing money, easing undermines the dollar increases the risk of long-term inflation.

In the mean time, investors continue to shed risk. U.S. equity markets pulled back again, extending their two-week decline, with the Dow dropping 1% and Nasdaq falling 2%. Silver and platinum edged up 0.3% and 0.1%, respectively, while palladium gained 1.4%.

At the Comex close: December gold dipped 50 cents to $1,324.60; December silver for edged up 6 cents to $22.44; January platinum added $1.80, to $1,403.70; and December palladium gained $9.55 to $714.90 an ounce.