Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied by 1.8% for its largest gain in nearly a month after weak Chinese economic data pulled global equities lower. China's manufacturing is falling for the first time in seven months, according to Markit's preliminary PMI report measuring factory output in May. Economist now expect China's GDP to contract in Q2, impeding the global recovery. Asian stocks tumbled on the news, pulling U.S. markets and the dollar lower and pushing investors into gold as a safe haven.

Gold was further supported, and the dollar undermined, by statements from influential Fed officials in support of continued monetary stimulus. One day after Fed Chair Ben Bernanke sent mixed signals about reducing quantitative easing, St. Louis Fed President James Bullard reassured the markets by saying the central bank is "not that close" to reducing quantitative easing, the Fed's money-printing program.. Separately, John Williams of the San Francisco Fed told Bloomberg that any reductions would be small and gradual, should they occur, and easily reversed if conditions worsened. QE supports higher gold because it devalues the dollar and increases the risk of long-term inflation. The other precious metals were mixed. Silver added 0.2% while platinum and palladium, more directly tied to industry, lost 0.8% and 1.8%, respectively

At the Comex close: August gold gained $24.40 to $1,392.80; July silver added 4 cents, to $22.51; July platinum lost $12 to $1,457.20; and June palladium dropped $13.50 to $738.65 an ounce.