Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied another 0.7% to close just under $1,293, its highest finish in a month, as traders digested the likelihood that quantitative easing will continue at its current pace for longer than previous thought. Fed Chair Bernanke told the Senate Banking Committee yesterday that it was "way too early" to decide whether to reduce easing in September, citing slower economic growth and weakness in the labor market. Gold had been pressured in recent months by concerns that pending reductions in monetary stimulus would strengthen the dollar and increase real interest rates, both of which would make gold less attractive as a safe-haven investment.

Gold traders now are at their most consistently bullish since the April sell-off, encouraged by Bernanke's dovish tone and strong physical buying in Asia. Although Indian demand has decreased because of official restrictions on imports, demand in Japan and China continues to build, according to a recent report from Barclays Plc. Gold inventories in Comex warehouses are falling dramatically as companies that store physical gold for eventual sales are transferring it to Asian markets to meet exploding demand. And recent drops in the gold price have caused gold producers to decrease production, diminishing future supply.

Gold has risen in seven of the last nine trading sessions, gaining 1.2% this week and 6.5% over the past two weeks. Silver added 0.4% today but finished the week down by 1.7%. Platinum rose 1.2% for the day and 1.7% for the week, while sister-metal palladium picked up 0.3% today and an impressive 3.7% for the week.

At the Comex close: August gained $8.70 to $1,292.90; September silver added 7 cents, to $19.46; October rose $16.40 to $1,431.20; and September picked up $2.25 to $749.75 an ounce.