Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied more than $35 from early-session lows to close with a 0.2% gain on deepening anxiety about the Spanish banking crisis. After starting the day with losses driven by yesterday's disappointment over Fed chair Ben Bernanke's equivocation about additional monetary easing, gold pivoted into gains on the news that Spain will formally request a bailout of its failing banks tomorrow. In addition, Fitch downgraded Spain's credit rating by three notches to near-junk status. Investors shifted into gold as a safe haven against the possibility of debt contagion, perceiving Spain's request and Fitch's downgrade as signs that Spanish banks are even worse than they seem. The dollar also rose, pressuring gold's gains. The other metals closed lower, with silver down 0.2%, platinum 1.2%, and palladium 2.2%

At the close: August gold added $3.40 to $1,591.40; July silver slipped 6 cents to $28.47; July platinum dropped $15.80 to $1,425.10; and September palladium fell $13.75 to $612 an ounce.

Gold received modest support from China's surprise decision to cut its benchmark lending and deposit rates for the first time since 2008 in an effort to promote growth in its sagging economy. China will release data on inflation, retail sales, and manufacturing this weekend, all of which is expected to show further contraction and the need for greater stimulus. Slower global growth and the deepening eurozone banking crisis are two of the "significant risks" that Bernanke has said could warrant additional monetary easing.