Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged another 2%, closing at a three-week high above $1,342, after disappointing payroll numbers deepened expectations that the Fed will not taper monetary stimulus this year. The U.S. non-farms payrolls report showed only 148,000 jobs added in September, far below the consensus 180,000 forecast by economists. The data indicated labor markets weakening even before the 16-day government shutdown and near-default engineered by Congress in October, which shaved some 0.3% of fourth-quarter GDP and damaged consumer confidence in the recovery.

According to a new Reuters poll, bond-market primary dealers now expect the Fed to wait until March to begin scaling back quantitative easing, its program of flooding the economy with cheap liquidity by purchasing $85 billion in long-term bonds each month. QE drives higher gold prices by devaluing the dollar and increasing long-term inflation risk. Primary dealers are the official trading counterparties obligated to help the Fed implement monetary policy.

Risk appetite rose on the jobs report with the Dow adding 75 points. The dollar plunged near a two-year low against the euro, helping gold to a 6% rise in the past week. A falling U.S. currency boosts demand for gold and other commodities denominated in dollars internationally by making them less expensive to holder of other currencies. Silver jumped 2.3% today for a two-day rise of 4%. Platinum and palladium added 0.8% and 0.4%, respectively.

At the Comex close: December gold $26.80 to $1,342.60; December silver jumped 51 cents to end at $22.79; January platinum gained $12.10 to $1,450.70; and December palladium added $2.65, to $752.90 an ounce.