Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged more than 2% to its highest finish since last February after another weak U.S. non-farms payrolls report kicked opened the door for more monetary stimulus. The Department of Labor counted only 96,000 jobs added in August, far fewer than projected. While the nation's unemployment rate fell from 8.3% to 8.1%, the reduction was attributed to more Americans leaving the workforce, not more finding jobs. The dollar fell to a three-month low on the news while stocks, commodities, and precious metals all rallied on expectations that the Fed will begin another round of quantitative easing (QE3), perhaps as early as its meeting next week. Silver outpaced gold for a second day, gaining 3.1% to reach its highest close since March, while platinum and palladium added 0.6% and 1.1%, respectively.

At the close: December gold surged $34.90 to $1,740.50; December silver rallied $1.02 to $33.69; October platinum gained $9.90 to $1,596.30; and December palladium rose $7 to $654.75 an ounce.

In Jackson Hole at the end of August, Fed officials were already moving toward another round of stimulus. Fed Chair Ben Bernanke admitted that "the stagnation in the labor market is a grave concern," and many members of the FOMC said more stimulus would be needed "fairly soon." Today's anemic payrolls report all but guarantees that more QE will be forthcoming in some form, according to most analysts. QE1 and QE2 helped the gold price to rise by more than 85% from 2008 to 2010 because it weakened the dollar and increased the risk of long-term inflation.

Precious metals received additional support today from the announcement that China has approved a huge stimulus package to improve its infrastructure. Over the next three years, the Chinese government will pour $127 billion into building airports, highways, and railroads with the intention of reviving its slowing economy. The news drove up commodity futures and bolstered the prospects for increased industrial demand for silver, platinum, and palladium.