Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained another 0.9% to just under $1,214, its highest close in three weeks, and the dollar declined again as more weak data spurred speculation that the Fed will be disinclined to raise interest rates soon. The metal has surged 3.3% in the past two sessions while the dollar has fallen for five straight.

U.S. consumer confidence fell to a four-month low in April, dragged down by a weaker job market and rising fuel costs. The drop was greater than forecast, and reflects the much slower consumer spending that has characterized the economy so far this year. Economist believe quarterly spending has fallen by roughly 50% from Q4 of 2014. The Commerce Department will publish official GDP and spending figures later this week.

The disappointing report is just the latest in a series suggesting that the recovery has gotten stuck. Service-sector growth and business spending have fallen off, factory activity fell sharply, new-home sales have plunged, and nonfarm payrolls have plummeted. The economy's downshift will be weighed by Fed this week as it meets to plot monetary policy.

Gold received additional support from reports that Venezuela will swap around $1 billion in gold to Citibank in exchange for cash, with the right to buy it all back at a later date. Strapped for cash, Venezuela had contemplated selling some of its gold holdings. This deal removes the prospect of that huge sale from the market.

China's gold demand rebounded in Q1, according to the China Gold Association, gaining 1.1% to more than 326 metric tons. The uptrend is a welcome change from 2014, when demand fell by 25% because of a variety of factors including a slowdown in the economy, anti-corruption measures by the government, and the overhang from a huge upsurge in gold purchases in 2013. The Association projects Chinese demand will continue to grow in coming years, and that China will overtake India as the world's biggest gold consumer.

The other precious metals were mixed on the day. Silver and platinum rose by 1.2% and 0.5%, respectively, while palladium slid 0.2%.

At the Comex close: June gold gained $10.70 to $1,213.90; July silver rose 19 cents to $16.63; July platinum picked up $5.20, to $1,158.60; and June palladium slid $1.30 to $781.15 an ounce.