Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold rallied another 1.3% to close above $1,141, its highest finish in 15 weeks, after disappointing data in the U.S. services sector caused the dollar to sell off, boosting demand for alternative stores of value.

The ISM reported that services grew at the slowest pace in two years in January. Including industries such as retailing, banking, and healthcare, the services sector comprises roughly 80% of GDP. The slowdown suggests that declines in manufacturing, exports, and the energy sector are now feeding back into the economy at large.

The dollar sold off against major rivals, with the Dollar Index plunging 1.8% as traders speculated that the ISM data means the Fed will be unable to raise interest rates anytime soon. In addition, New York Fed President William Dudley signaled today that tightening financial conditions and a deteriorating outlook for global growth could delay future hikes. A weaker dollar supports gold and other commodities denominated in it for international trade by making them less expensive to overseas buyers.

Treasury bonds rallied alongside gold on flights to safety, with 10-year yields falling to the lowest level in a year. The market largely overlooked a report from ADP showing that private employers added 205,000 jobs in January, more than expected.

The other precious metals outpaced gold's gains, with silver jumping 3.1% while platinum and palladium surged 2.9% and 4.9%, respectively.

At the Comex close: April rallied $14.10 to $1,141.30; March silver jumped 44 cents to $14.73; April platinum gained $24.40 to $880.10; and March palladium surged $24.25, to $515.55 an ounce.