Daily Gold Update

Source: Dana Samuelson, American Gold Exchange

Austin, TX— Gold drifted lower during the New York session as U.S. dollar strength once again pressured the yellow metal lower. The dollar continued to strengthen against other currencies, primarily versus the euro, as traders increasingly anticipated that the ECB would lower interest rates next week to counter low inflation rates in the eurozone. In a sharp reversal from last Friday when it hit a 23-month high against the dollar, the euro declined 2.3% this week against the U.S. currency. The U.S. dollar index, which measures the buck against a basket of currencies, gained an identical 2.3% agsint this week after hitting an 8-month low last Friday. A rising dollar pressures the gold price because gold is denominated in dollars internationally and becomes more expensive for holders of other currencies.

Adding to U.S. dollar allure was the release of the Institute of Supply Managements October index at 56.4%, its highest level since April 2011. Although this was only a fraction higher than September�s 56.2% reading, analysts had anticipated a reading of around 55%. A reading above 50% indicates expansion. An ISM reading above 50% indicates manufacturing expansion while a reading below 50% indicates manufacturing contraction. October was the fifth consecutive month in which manufacturing activity expanded. The positive data added to speculation that the Fed may begin to taper monetary stimulus sooner than previous thought, prehaps as early as December. The taper would suport the dollar and thereby weigh on gold.

At the Comex close: December gold fell $10.50 to $1,313.20; December silver was virtually unchanged from yesterday at $21.87; January platinum gained a modest $3.50 moving up to $1,451.90; and December palladium edged up $1.45 to $738.25 an ounce.