Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rebounded by nearly 1% for its biggest gain of the month as bargain hunters rushed back into the market. Traders viewed last week's 2.3% sell-off as overdone, with gold bouncing off a near-term bottom on Friday to pick up 0.5% after hours. That momentum continued into today's session as gold prices were pushed higher by a combination of renewed worries about the eurozone and reports of central banks buying.

Italy appears to be heading for a hung parliament after former Prime Minister Silvio Berlusconi, who ran on an anti-austerity platform, performed better than expected in the general election. Anticipating that such an outcome would jeopardize the economic and structural reforms required to keep Italy solvent, traders dumped Italian stocks and bonds in favor of safe havens like gold and the dollar. U.S. equities also tumbled, with the Dow losing more than 1.5%. Last Friday's downgrade of the U.K.'s rating by Moody's because of weak growth and rising debt also supported gold, which tends to rise during times of financial and political uncertainty. The other precious metals followed gold's lead, with silver jumping 1.9%, platinum 0.8%, and palladium 1.9%.

At the Comex close: April gold rose $13.80 to $1,586.60; March silver jumped 53 cents to $28.99; April platinum gained $13.30 to $1,620.70; and March palladium added $13.75, to $749.05 an ounce.

Russia and Kazakhstan added to their gold reserves for the fourth consecutive month in January, according to IMF data, and demand from China was also strong, according to a Bloomberg report. Swiss banking giant UBS is predicting a "major gold rally" later this year, driven by central bank buying, ongoing monetary easing, and a projected slowdown in global growth that will reignite safe-haven demand among individual investors.