Daily Gold Update

Source: American Gold Exchange

Austin— Silver surged by nearly 4% and gold tacked on almost $10 an ounce today as investors "bought the rumor" of a possible Greek bond deal and policy shift in China to ease domestic credit. Greece's bond agreement, if it happens, would help to strengthen the euro against the dollar, while credit-easing in China would help to stimulate demand for commodities in the world's second largest economy. Both of these are seen as short-term bullish for precious metals.

At the Comex close: February gold gained $9.50 to $1,664; March silver jumped $1.17 to $31.68; April platinum rose $14.30 to $1,532.30; and March palladium dipped $2.70 to $675.70 an ounce.

Marketwatch reported today that international creditors are close to accepting a 65% to 70% write-down on their Greek bonds. If the deal goes through, the prospects for Greek solvency will improve (for now) and the eruo should rally hard against the dollar. However, the UK Telegraph reported that a leaked draft of the IMF's World Economic Outlook calls for far more aggressive monetary easing by the ECB in order to prevent a serious eurozone crisis. Although probably necessary to stave off catastrophe, this action would surely devalue the euro in the longer term.

As we reported earlier in the week, Credit Suisse already expects the ECB's Long Term Refinance Operation (LTRO) to expand to 1 trillion euros or more by February. What's more, the investment giant is also predicting a third round of quantitative easing from the Fed this spring. Ira Jersey, director of U.S. rates strategy for Credit Suisse, said on a Bloomberg radio show today: �We do think the Fed is going to do another round of asset purchases later in the quarter, probably aiming for April.� The Fed purchased $2.3 trillion in mortgage and government debt during QE1 and QE2, and the gold price skyrocketed. With additional and simultaneous easing in the eurozone, U.S., and China, we'd expect history to repeat itself.