Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.5% to close over $1,300 for the first time since August after the European Central Bank announced a massive program of monetary stimulus, boosting demand for alternative stores of value.

The ECB will buy 60 billion euros per month in government bonds, around 20% more than expected, through September 2016, Mario Draghi said today. This Fed-style program of asset purchases, known as quantitative easing, is intended to head off deflation and promote growth by dramatically increasing the monetary base. It will further devalue the beleaguered euro, driving Eurozone investors toward gold to hedge against losses in purchasing power.

Following suite, Denmark announced its second reduction in interest rates this week, seeking to prevent unwanted inflows into the krone from the weakening euro. Canada also cut interest rates this week, and Switzerland decoupled its franc from the euro last week, concerned about the devaluations that follow QE.

Gold has now gained almost 10% so far this year, its best annual start since 1980, as rising falling global growth and volatility in equity and currency markets drives investors toward safe havens.

Russia added to its sovereign gold holdings for the ninth straight month in December, bringing its sovereign reserves to 38.8 million ounces, the fifth most of any country. While Russia has more than tripled its horde in the last decade, gold remains only 11% of its total foreign reserves, far less Germany's 66% or the U.S.'s 72%. Central banks have bought around 500 tonnes in each of the last two years to offset the rising currency risk associated with monetary easing.

The other precious tracked higher with gold. Silver picked up nearly 1% while platinum added nearly 0.7% and palladium and palladium 0.5%.

At the Comex close: February gold gained $7 to $1,300.70; March silver picked up 17 cents to $18.36; April platinum added $8.40 to $1,284.80; and March palladium rose $4.05 to $772.30 an ounce.