Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2% as the minutes from the FOMC meeting in late July, released today, showed a consensus among Fed officials that reductions in monetary stimulus should begin later this year. To the relief of gold traders, the central bankers did not signal that the taper will begin in September. However, they appeared to agree with Fed Chair Ben Bernanke's recent statements that the economy is poised to improve over the next few months, reducing the need for continuing the $85 million-per-month bond buying program, known as quantitative easing, at current levels beyond year-end. The final decision on timing will be determined by data.

The dollar rallied on the minutes, pressuring the gold price, while the Dow and Global Dow fell 0.7% and 0.8%, respectively. QE has boosted higher gold prices by undermining the dollar and increasing the risk of long-term inflation. It has also spurred record-high rallies in U.S. equities by flooding the market with cheap liquidity and encouraging risk-taking among investors. The other precious fell harder than gold with silver dropping 0.5% while platinum and palladium each lost 0.4%.

At the Comex close: December gold slipped $2.50 to $1,370.10; September silver dropped 11 cents to $22.96; October platinum lost $6.40 to $1,519.10; and September palladium shed $2.75 to $746.90 an ounce.

Bloomberg reports that purchases of gold mining companies by producers in China and Hong Kong rose to a record $2.2 billion this year. With valuations reduced by the fall in gold prices, foreign mining companies are being scooped up by well-financed Chinese gold producers seeking to meet the seemingly insatiable demand for bullion in the world's second largest economy. Gold consumption jumped in China by 54% in the first half of this year, according to the China Gold Association. Still, per capita gold holdings are merely one-quarter of that of developed nations, leaving huge potential for increased sales.