Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3% to close at a seven-week low of $1,280 as strong ISM manufacturing data pulled money from safe-havens. U.S. factory output increased in March, showing broad-based gains as the economy strives to regain its footing after a brutal winter. The S&P 500 rallied to a new record at 1,886 and the Global Dow added 0.7% as risk-appetite rose again.

With U.S. economic activity rebounding, the Crimea conflict easing, and Asian physical demand slowing because of China's economic underperformance, gold has lost some of the traction that propelled it to a six-month high near $1,380 in mid-March. Following the March FOMC meeting, Fed Chair Janet Yellen's offhand comments suggesting that interest rates could rise as early as spring 2015, gave some added momentum to the skid. Near-zero interest rates, like other forms of monetary easing, have supported higher gold prices by flooding the markets with cheap liquidity and raising the risk of long-term inflation.

However, it should be noted that gold's recent drivers have not disappeared. Geopolitical tension remains elevated: the Ukraine is still a potential flash-point in Europe and the Koreas have set Asia on edge by exchanging artillery fire during military exercises yesterday. Further weakness in China's growth is likely to spur stimulus measures in the world's second largest economy; the ECB is weighing quantitative easing to combat deflation; and Yellen forcefully defended the Fed's loose monetary policies yesterday, arguing that more needs to be done to heal the economy. Any of these factors could trigger a near-term rebound in safe-haven demand for gold and silver.

The other precious metals were mixed today. Like gold, silver slid 0.3% while platinum and palladium both rose 0.6%. At the Comex close: June gold slipped $3.80 to $1,280; May silver slid 6 cents to $19.69; July platinum added $8.80, to $1,429.60; and June palladium picked up $4.85, to $781.95 an ounce.