Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Extending Friday's rally, gold gained 0.5% and silver surged 1.9% as the February ISM report showed a slight expansion in U.S. manufacturing. Gold continued its recent trend of trading as a commodity rather than a safe haven, supported by news that China's factory activity unexpectedly rose, allaying fears of a hard landing in the world's second largest economy. Investors largely ignored reports that eurozone manufacturing fell again and unemployment hit a 14-year high. Global equities and commodities rose, with oil jumping 2.2%. Platinum and palladium both picked up 0.7%.

At the close: June gold gained $7.80 to $1,679.70; May silver rose 6 cents to $33.10; July platinum added $10.80 to $1,654.90; and June palladium rose $4.70 to $658.80 an ounce.

While the ISM report was generally positive it was by no means strong, registering just 53.4% when below 50% indicates contraction. New orders decreased from the previous month and construction spending unexpectedly stalled. Last week, Ben Bernanke emphasized that it is far too soon to declare victory in the U.S. economic recovery. "I think it's really important not to be complacent," he told ABC News. "We have a long way to go, a lot of work to do, and we're going to keep doing that." He noted that housing markets were still weak and joblessness too high, and emphasized that all policy options are still on the table. Certainly, little in today's ISM would preclude additional easing. Zero Hedge reported that Morgan Stanley still expects additional bond sales and rate cuts in the U.S., eurozone, Japan, and U.K. this year.