Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.5% as prospects improved for a Cyprus bailout, reducing safe-haven demand and prompting traders to take profits from gold�s recent rally. European finance ministers remain locked in negotiations with Cyprus over an aid package to prevent its default and possible expulsion from the eurozone. Averof Neofytou, a leading Cyriot official, said he was optimistic that an acceptable framework would be hammered out before Monday�s deadline. A deal would reduce the threat of debt-contagion and bank-runs spreading through the eurozone. Global equities rallied on the positive development and the dollar declined, along with gold, on reduced safe-haven pressure. Nonetheless, gold finished the week nearly 1% higher and posted its third consecutive weekly gain. Silver fell 1.8% today and lost 0.5% on the week. Platinum added 0.1% but lost 0.7% for the week; palladium picked 0.6% today but finished the week 1.8% lower.

At the Comex close: April gold slipped $7.70 to $1,606.10; May silver lost 51 cents to $28.70; April platinum added $1.60, to $1,581.70; and June palladium rose $4.70 to $761.55 an ounce.

This week�s turmoil in Cyprus is a stark reminder of the eurozone's continuing fragility, an unfortunate reality that is making traders bullish on gold again. In this week�s Bloomberg survey, 65% of analysts predict higher gold prices next week, the most since early March, and hedge funds increased their bullish bets by 9%. Higher gold prices are expected for two main reasons: because Europe�s debt crisis is far from over and ultra-loose monetary policies continue to rule the day. Fed Chair Ben Bernanke this week emphatically endorsed the continuation of quantitative easing, while the Bank of Japan reaffirmed its intention to undertake a bold expansion of its easing program. These developments promise to drive demand for gold as a safe haven and international store of value.