Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged 2% to $1,360, its highest close in nearly two months, as U.S. equities tumbled, sending investors scrambling for safe havens. The metal initially dropped as low as $1,318 following news that jobless claims fell to a six-year low and home-builder confidence jumped to an eight-year high. The upbeat data increased speculation that the Fed may begin to taper quantitative easing in September. QE has supported higher gold prices because it devalues the dollar and increases long-term inflation risk.

However, gold turned around and marched steadily higher as the Dow and S&P 500, pressured by taper talk and rising Treasury yields, fell nearly 1.5%. QE has supported record-high equities prices because it floods the markets with cheap liquidity, drives down bond yields, and encourages risk-taking among investors. Once gold broke through resistance at $1,350 for the first time in two months, a large number of accumulated stop-buy orders were triggered, pushing the price higher in automated trade. The other precious metals followed gold, with silver soaring 5.2% while platinum and palladium jumped 1.8% and 2.2%, respectively.

At the Comex close: December gold surged $27.50 to $1,360.90; September silver jumped to $22.93; October platinum gained $27.10 to $1,532.30; and September palladium picked up $16.50 to $756.85 an ounce.