Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rebounded by 2.7% to close above $1,320, recovering most of yesterday's drop, as disappointing private payrolls data combined with deepening concerns about the government shutdown to boost demand for the metal as a store of value. ADP reported that U.S. companies created fewer jobs than forecast in September and August's totals were revised lower. Meanwhile, the first partial closure of the Federal government in seventeen years entered its second day with no signs of ending soon. Analysts are increasingly worried that it will merge with the debt-ceiling impasse to force the government into default after October 17, which could severely damage the global economy.

Caught between weakness in the labor markets and the economic impact of political gridlock, the Fed is now expected to wait, perhaps until 2014, before scaling back quantitative easing, its program of buying $85 billion per month in long-term bonds. And the taper may take much longer than previously thought. Eric Rosengren, president of the Boston Fed, today said that easing may be extended "for several years" rather than concluding in mid-2014. Tantamount to printing money, QE supports higher gold prices because it devalues the dollar and raises the risk of long-term inflation.

The dollar fell against most rivals on expectations of a taper delay while Treasurys and precious metals gained on safe-haven inflows. Silver added 3.4%; platinum gained 0.6%; and palladium added 0.3%

At the Comex close: December gold rallied $34.60 to $1,320.70; December silver gained 72 cents to $21.90; January platinum climbed $8.10 to $1,393.40; and December palladium added $2.30, to $721.20 an ounce.