Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending last week's 1% rise, gold gained 0.5% in electronic trading to hit a four-month high above $1,341 as the dollar plummeted and oil rose, boosting demand for alternative stores of value.

The dollar fell another 0.6%, hitting a three-year low against major rivals, as economic optimism in the Eurozone and Japan drove expectations of monetary tightening by their central banks, reducing the relative attractiveness of the buck to currency traders.

The European Central Bank voiced a hawkish turn in last week's release of minutes from its latest meeting, signaling reductions in quantitative easing because of rising GDP and inflation, and driving the euro to a three-year high. Bank of Japan Governor Haruhiko Kuroda offered a similar view of Japan's outlook, driving the yen to a four-month high.

While the Fed is expected to continue gradual rates hikes in 2018, the rate differential between the US and other major economies is expected to equalize, pulling more foreign exchange investment toward the euro and yen at the expense of the dollar. A falling dollar supports gold and other commodities priced in it for global trade by making them less expensive overseas.

Oil rose 0.8% to push above $70 per barrel on signs that decreased production by OPEC and Russia is tightening global supplies. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also higher, with silver surging 1.4% while platinum and palladium rose 0.9% and 1.2%, respectively.

In electronic trade: February gold gained $6.20 to $1,341.10; March silver for surged 23 cents to $17.38; April platinum added $9, to $1,005.20; and March palladium rose $12.95 to $1,118.30 an ounce.