Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.3% and the dollar strengthened as investors continue to liquidate risk because of anxiety about the eurozone. Equities and most commodities sold off again while the euro fell to its lowest level against the dollar in almost four months. The dollar index, conversely, rose for a twelfth straight session, its longest winning streak since its inception in 1973. Oil fell to a five-month low below $94 and silver lost 1% to a 2012 low. After large drops yesterday, platinum and palladium bucked the trend by rising 0.3% and 1.1% today.

At the close: June gold dropped $3.90 to $1,557.10; July silver fell 27 cents to settle $28.08; July platinum added $3.90 to $1,446.50; and June palladium rose $6.25 to $601.10 an ounce.

The buck has gained nearly 3% this month while gold has lost 6.2%, largely because hedge funds and other large speculators, fearing a global slowdown brought on by a eurozone implosion, have moved heavily into cash. The dollar's fundamentals, however, don�t fully warrant the volume of safe-haven inflows it is currently receiving. Despite flat consumer prices in April, core inflation rose by 0.2% and is now running at an annual rate of 2.3%. The Fed's commitment to near-zero interest rates until late 2014 means a negative real return on every dollar held for quite some time. Gold could certainly go lower from here: an important support level at $1,550 is getting close. But its recent retracement to near six-month lows has positioned it once again to gather inflows from hedge funds going long, as well as from eurozone investors looking to combine safety with positive real returns.