Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.7% to close above $1,201 after weak U.S manufacturing and industrial production dimmed the outlook for a rate increase in June, weakening the dollar and boosting demand for safe havens.

Production by U.S. industries fell 0.6% in March for an annualized decline of 1%, according to data released today by the Federal Reserve, while the Empire State manufacturing index dropped sharply into negative territory in April. In addition, the Fed's so-called Beige Book of anecdotal reports from around the nation concluded that the strong dollar is a significant drag on manufacturing.

Coming one day after disappointing reports on retail sales and producer prices, the weak data caused the dollar to retreat against major rivals as traders speculate that the Fed will be more resistant to an early rate hike. A weaker dollar supports higher prices for gold and other commodities denominated in it for international trade by making them less expensive to foreign buyers. U.S. Treasury prices also rallied on safe-haven inflows.

Gold received further support from reports that China's economy grew at its slowest pace in six years during the first quarter, prompting expectations that more stimulus will soon be provided by the People's Bank of China. Additional monetary easing is likely to devalue the yuan and boost demand for assets, like gold, bought for protection from currency risk and inflation.

The other precious metals tracked higher with gold. Silver gained 0.7% while platinum and palladium added 0.3% and 0.6%, respectively.

At the Comex close: June gained $8.70 to $1,201.30; May silver rose 12 cents to $16.28; July platinum picked up $2.90 to $1,156.60; and June palladium added $4.60, to $767.10 an ounce.