Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold added another 0.2% to finish above $1,316, its highest close in two months, as Janet Yellen's statements earlier this week, suggesting interest rates will remain near historic lows until the middle of next year, continued to stoke demand for alternative stores of value. Low interest rates support higher gold prices by weakening the dollar and lowering opportunity costs for holding the metal, which offers no yield. Gold finished with a weekly gain of 3.3%, its biggest in four months.

Geopolitical instability is also underpinning higher gold prices. President Obama yesterday committed 300 members of the U.S. Special Forces to Iraq to help counter the Sunni insurgency that threatens to plunge than nation into civil war and disrupt oil supplies. In addition, the conflict between Russia and Ukraine is heating up again, with NATO accusing Russia of amassing more troops on the Ukrainian border. Gold rallied to a six-month high near $1,390 when Russia annexed Crimea in March.

Speculators are increasing their bullish bets on higher gold prices, with by far the most actively-traded options contract on Comex granting the right to purchase August gold at $1,350. Bullion options are enjoying their biggest rally in nine months, according to Bloomberg.

The other precious metals were mixed on the day but uniformly higher for the week. Silver added 1.5% to finishing with 6.6% weekly gain. Platinum and palladium gave back 1.2% and 1.9%, respectively, today but ended 1.5% and 1.2% higher for the week.

At the Comex close: August gold added $2.50, to $1,316.60; July silver gained 30 cents to $20.95; July platinum fell $17.20 to $1,457.30; and September palladium lost $16.40 to $822.20 an ounce.