Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3%, closing just above $1,241, on profit-taking after a three-day rally that lifted the metal more than 2% to its highest level in nearly five weeks. A mild rebound in equities and some positive U.S. economic data also pressured the metal by reducing demand for safe-havens.

One day after a series of disappointing economic reports caused U.S. equities to drop by more than 1% and gold to rally by nearly the same amount, a round of positive U.S. data gave the market some cause for optimism. Jobless claims fell 23,000 to a 14-year low last week as employers avoided lay-offs despite a slowing global economy. Separately, the Fed reported that factory production edged up 0.5% in September after falling by the same amount in August, and American households are their most upbeat about prospects in two years.

Yesterday's report of falling producer prices is prompting further concern about the direction of the economy and monetary policy. Saint Louis Fed President James Bullard said today that the Fed should continue with quantitative easing longer than expected in light of falling inflation, volatile markets, and slowing global growth. A renowned inflation hawk who has never been a strong advocate of QE, Bullard surprised the markets by calling for the continuation of the Fed's bond-buying program. Tantamount to printing money, QE is bullish for gold because it devalues the dollar and increases risk of long-term inflation.

The other metals tracked lower with gold. Silver dipped 0.2% while platinum and palladium fell 0.7% and 2.4%, respectively.

At the Comex close: December gold slipped $3.60 to $1,241.20; December silver dipped 4 cents to $17.43; January platinum lost $9.30 to $1,251.50; and December palladium dropped $18.75 to $745.50.