Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied 1.1% on safe-haven inflows as global equities extended losses, shaken by worries about ongoing monetary easing. For the first time in 2013, the Dow fell for a third straight session, dropping another 127 points to close under 15,000. The S&P 500 fell almost 1% and the Global Dow lost 0.5%. Anxious markets are still adjusting to yesterday's announcement that the Bank of Japan will maintain but not expand monetary easing. Japan still plans to double its monetary base within two years, however, by pumping $1.4 trillion into its economy.

Gold was also supported by a weaker dollar, which fell across the board but especially against the yen, losing more than 3% in the last two days to the Japanese currency. The dollar's declines have been furthered by softer U.S. economic data, including last week's tepid U.S non-farms payroll report and terrible ISM manufacturing report, which have diminished the likelihood that the Fed will taper quantitative easing before the end of the year. Tantamount to printing money, QE has helped gold to surge by 60% since 2008 because it devalues the dollar and increases the risk of long-term inflation. It has also spurred record-high rallies in equities by flooding the markets with cheap cash and encouraging investors to take risk.

Bullion holdings in SPDR Gold Trust, the largest gold-backed ETF, held steady after inflows of 2.7 tons on Monday, the largest in a month, signifying that the recent outflows from paper gold may have run their course. The other metals were mixed. Silver and palladium gained 0.6% and 0.5%, respectively, while platinum slipped by 0.11%.

At the Comex close: August gold rallied by $15 to $1,392; July silver added 15 cents, to $21.80; July platinum slipped $1.70 to $1,478.20; and September palladium picked up $3.75, to $756.25.