Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied by 1.5% to close above $1,467 after the European Central Bank cut its benchmark interest rate by a quarter point to a record-low 0.5%. Calling ECB monetary policy "extraordinarily accommodative," President Mario Draghi said the central bank stands "ready to act" if deeper easing is required to pull the region out of recession. Drahgi also confirmed his commitment to providing backstop liquidity for the banking system if needs be.

Following yesterday's Fed policy statement that U.S. quantitative easing will continue full-speed and may even increase if the economy deteriorates, traders viewed the ECB's cut to mean more easy money on both sides of the Atlantic, increasing the risk of long-term inflation and supporting higher asset prices. The Dow added 120 points and the S&P gained nearly 1%. The dollar also rallied strongly as the euro fell, making gold's gains even more impressive. A rising dollar typically pressures the gold price because gold is denominated in dollars internationally, making it more expensive to holders of foreign currencies. The other precious tracked gold higher as silver and platinum added 2.1% and palladium 1.3%.

At the Comex close: June gold rallied by $21.40 to $1,467.60; July silver picked up 49 cents to $23.83; July platinum gained $30.70 to $1,500.20; and June palladium added $8.55, to $693.30 an ounce.