Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.5% to close below $1,346 as the dollar firmed alongside rising risk appetite. The Dow and S&P 500 both closed at new record highs behind improved earnings and growing certainty that the Fed will maintain quantitative easing at current levels at the conclusion of its two-day meeting tomorrow.

In addition to increasing the risk of long-term inflation by flooding the markets with cheap liquidity, QE supports higher stock prices by driving interest rates down and encouraging investors to seek higher returns by taking on risk. Today, QE's risk-play trumped demand for inflation hedges like gold and silver, in part because wholesale prices unexpectedly dipped in September, according to the Labor Department.

The U.S. dollar rallied with higher stock earnings, gaining 0.4% against major rivals. A stronger dollar weighs on demand for gold and other commodities denominated in dollars internationally by making them more expensive to holders of other currencies. Gold's losses were partially offset after the Conference Board reported that consumer confidence plunged in October by the most in more than two years, building the case for continued stimulus and reminding investors of the need for safe havens. Silver tracked gold lower, dipping 0.2%, while platinum and palladium fell 0.8% and 0.5%, respectively.

At the Comex close: December gold slipped $6.70 to $1,345.50; December silver dropped 5 cents to $22.49; January platinum shed $11 to $1,461.90; and December palladium slid $3.40 to $747.05 an ounce.