Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold climbed nearly 1% to retake $1,200 as bargain-hunters stepped in after yesterday's 3.4% plunge. The metal was hit hard after the Federal Reserve announced a $10 billion-per-month taper to quantitative easing late Wednesday. With a modest rebound today as traders covered shorts and took advantage of the lowest prices since August 2010, gold finished the week down 2.5% .

Taking a break from its Fed-inspired rally, the ICE dollar index fell despite revised GDP figures showing that the U.S. economy expanded at an annual rate of 4.1% last month rather than the 3.6% originally reported, and a weaker yen caused by the Bank of Japan's vote to keep monetary easing at record levels. A falling dollar supports higher prices for precious metals and other commodities that are denominated in dollars for international trade by making them less expensive to holders of other currencies.

The Fed's assurance this week that interest rates will remain near zero for longer than previously promised, even as QE is scaled back, helped to mitigate the buck's momentum and cushion gold's fall. Negative real interest rates, or rates lower than inflation, encourage investors to shift from cash to hard assets that may protect against inflation.

The other precious metals followed gold higher. Silver jumped 1.4% but closed the week with a 4.4% loss. Platinum and palladium climbed 1.1% and 0.4%, respectively, but still dropped around 2% this week.

At the Comex close: February gold gained $10.10 to $1,203.70; March silver jumped 27 cents to $19.45; January platinum climbed $13.80 to $1,332.20; and March palladium added $2.45, to $698.75 an ounce.