Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2% as the dollar strengthened behind a new round of grim economic news from Europe and expectations of deeper easing from the Bank of Japan. Manufacturing unexpectedly shrank in the U.K., prompting concerns that the economy may slide into recession for the third time in five years. Eurozone unemployment rose to a record high near 12% in January and inflation fell under the ECB's 2% target for the first time in four years. Speculation that eurozone interest rates will be cut again helped to weaken the euro and strengthen the dollar, pressuring the gold price. And the Bank of Japan is reportedly preparing for another round of quantitative easing in April. In the longer term, more easing from these central banks should be bullish for gold because it debases their currencies and increases inflation risk. In the short term, however, it weighs on gold by bidding up the dollar, as it did today. Tracking gold lower, platinum and palladium declined 0.8% and 2.5%, respectively, while silver picked up 0.5%.

At the Comex close: April gold slipped $2.50 to $1,575.70; May silver added 14 cents, to $28.58; April platinum fell $12.10 to $1,571.40; and June palladium dropped $18.20 to $716.35 an ounce.

Gold finished the week with a slight gain of 0.2% but lost nearly 5% for the month of February, posting its fifth consecutive month of declines. Despite this stretch of weakness, Marketwatch reported today that gold's bull market remains very much alive. Aggressive monetary easing by most central banks will continue to undermine currencies as the world's major economies try to inflate their way out of stagnation. Sovereign debt problems persist in the eurozone and U.S., with political dysfunction decreasing the likelihood of resolution. And central banks will continue to buy gold in record amounts to offset currency risk engendered by recession, debt, and easing. These factors, Marketwatch concludes, are ready to extend gold's eleven-year bull market once the current correction has passed.