Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3% to close above $1,257, holding most of yesterday's 2.2% surge, after a tentative U.S. budget deal bolstered the case for an early taper of quantitative easing. Congressional negotiators reached a prospective agreement on revenue and spending that, if approved by the House and Senate, would avert another damaging government shutdown next month. The possibility of a protracted budget battle in January had been seen as one reason for the Fed to delay the taper. With that uncertainty removed, traders see the odds of a December taper increasing.

U.S. equity markets retreated sharply in anticipation of the taper, with the Dow losing .8% and the S&P 500 more than 1.1%. Tantamount to printing money, QE has spurred higher prices for equities and precious metals by flooding the economy with liquidity, devaluing the dollar and increasing the risk of long-term inflation. Recent pricing action suggests that metals more so than equities have priced-in the taper. Silver picked up 0.2% and palladium added 0.1% while platinum followed gold, down 0.3%

At the Comex close: February gold slipped $3.90 to $1,257.20; March silver picked up 4 cents to $20.36; January platinum slipped $3.50 to $1,385; and March palladium added 10 cents, to $738.55 an ounce.