Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold closed 0.6% lower in choppy trade but finished the week with a 4.2% gain, its biggest in three months. Prices initially rose by more than $10 to an intraday high above $1,483 after first-quarter U.S.GDP came in softer than expected, underscoring the likelihood of extended monetary easing when the Fed meets next week. But momentum quickly reversed after consumer sentiment was reported at a three-month low, further dimming growth prospects and prompting a minor sell-off in oil and industrial commodities. Traders took profits from the week's strong rally, pushing gold as low as $1,447 before it bounced back to close above $1,453. Additional demand kicked in after closing as gold added another 0.6% on bargain-hunting in electronic trade to recoup the earlier session's losses. Silver fell 1.6% for a weekly gain of 3.5%. Platinum gained 0.9%, up 3.7% for the week, and palladium added 0.1% for a weekly gain of 0.7%

At the Comex close: June gold fell $8.40 to $1,453.60; May silver dropped 38 cents to $23.76; July platinum rose by $12.40 to $1,476.50; and June palladium picked up 55 cents to $681.95 an ounce.

Bloomberg reports that gold traders are the most bullish in a month as surging demand for physical gold and new buying by central banks have offset nearly half of gold's 13% sell-off from last week. Sales of gold bullion coins by the U.S. Mint are on pace for their biggest month since December 2009; and sales have tripled over last month for Britain's Royal Mint. IMF data show central bank gold reserves climbed to an eight-year high after Russia, Turkey, Kazakhstan, Azerbaijan, Belarus, Greece, Kyrgyz Republic, and Mongolia all increased their holdings.

Even hedge funds, which were largely responsible for last week's sell-off in paper gold, have stepped back in, raising their bullish bets to the most in more than a month, according to data from the CFTC. Major gold producer Agnico-Eagle of Canada said today that gold prices have probably bottomed and should rise as high as $1,800 in the next twelve months behind central bank buying and demand from long-term investors because of monetary easing and economic uncertainty.