Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3% while risk assets tumbled on economic turmoil in Europe. The IMF is ready to cut off aid to Greece, according to German press reports, for its inability to reach spending goals, putting the nation at risk of default as early as September. Concerns are rising again that Greek default could trigger contagion in Spain and Italy, which have intractable problems of their own. The dollar rallied to a two-year high and rising Treasury prices pushed yields to new record lows as investors fled risk. The Dow lost more 100 points and oil dropped more than 4%. Against this backdrop gold's performance was remarkably strong as safe-haven inflows pulled it from early lows. Silver lost 1% while platinum and palladium dropped 1.1% and 0.9%, respectively

At the close: August gold slipped $5.40 to $1,577.40; September silver for September fell 26 cents to $27.04; October platinum dropped $15.60 to $1,398.90; and September palladium lost $5.15 to $570.95 an ounce.

Compounded by Greece's woes, deepening problems in Italy and Spain are pushing Europe to the brink. The cost of insuring Spanish debt spiked to new all-time highs and yields on Spanish bonds pushed up again to nearly 7.5%. Fears are rising that the eurozone's fourth-largest economy, facing a worsening recession, will require a full-fledged bailout for which there are insufficient resources in the eurozone's bailout facilities. Italy's economy, the eurozone's third-largest behind those of Germany and France, is also stagnating and markets are increasingly nervous that it won�t be able to maintain its $2.3 trillion debt-burden, which is second in size only to Greece's. The ECB is coming under increased pressure to step in with quantitative easing and other unconventional measures to provide much-needed liquidity. Gold rose to a new all-time high over $1,900 last fall in large part because of fears of eurozone default.