Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2%, ending its longest winning streak since August, after strong retail data boosted economic optimism and strengthened the dollar. Sales by U.S. retailers leapt by 1.1% in February, more than doubling forecasts, as consumers grew more confident in an improving job market. The strong data may reduce pressure on the Fed to extend monetary easing when it meets again at the end of the month, a prospect that helped to lift the dollar today. A rising dollar typically reduces the gold price because gold is denominated in dollars internationally, making it more expensive for holders of other currencies. After gaining for four straight sessions on safe-haven inflows and growing worries about eurozone recession, gold initially rallied to brush resistance at $1,600 before slipping back to close above $1,588. The other precious metals followed it lower, with silver dropping 0.7%, platinum 0.1%, and palladium 0.6%.

At the Comex close: April gold slipped $3.30 to $1,588.40; May silver lost 21 cents to $28.96; April platinum edged down $1.90 to $1,593.10; and June palladium dropped $4.25 to $771.25 an ounce.

The World Gold Council today reported that global central banks are shifting their currency reserves away from the dollar and euro in an effort to reduce risk. In 2000, 62% of global reserves were held in dollars and 22% in euros. Last year, only 54% were in dollars and 16% in euros. During this twelve-year period, total reserves increased by sixfold, from $2 trillion in 2000 to $12 trillion in 2012. Gold's share has remained constant at 13%, underscoring the huge increase in volume-buying by central banks needed to maintain that share. In 2010, central banks became net-buyers of gold after more than twenty years of being net sellers. Last year they purchased more than 534 tons, up 17% from 2011, when they bought more than 456 tons. The World Gold Council expects this trend to continue, putting a solid floor under gold. In addition, a continuing shift away from the dollar in reserve holdings is likely to weaken the currency in the longer-term, which would put upward pressure on the gold price.