Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold edged slightly higher and the dollar crept lower after solid U.S. corporate earnings and a surprising rise in German business confidence helped to rally equities and encourage risk appetite. In addition, the Shanghai Composite Index hit a one-month high on speculation of an upcoming new round of monetary easing in China, according to Bloomberg. Oil gained more than 1.3% and commodities rose in general, with the S&P GSCI gauge of commodities up 0.7%. Gold picked up 0.1% for the day but lost 1% for the week while silver lost 0.4% for the day but gained 0.8% for the week.

At the close: June gold added $1.40 to $1,642.80; May silver lost 13 cents to $31.65; July platinum rose $6.20 to $1,584.20; and June palladium gained $13.60 to $676.90 an ounce.

The gold market has been trading in a narrow band recently, looking for direction. After rising with risk assets for most of the year, it's seen a mild return of safe-haven interest as worries have rekindled over eurozone debt and U.S. employment. But those gains have been limited by a rising dollar, which weighs upon gold because gold is denominated in dollars internationally.

The G20 meeting in Washington, starting today, and next week's FOMC meeting should offer some signals to investors about where gold is heading in the short term. The IMF today obtained pledges for $430 billion in new funds to contain the risk of debt contagion in the eurozone, an increase in liquidity that has the potential to buoy both the euro and gold. And while no immediate changes are expected from the Fed, its every utterance will be scoured for hints of monetary easing. In light of softening employment, housing, and manufacturing data, many analysts see the odds increasing in favor of QE3. During QE1 and QE2, gold rose by 85%. So any language next week in favor of accommodative policies should register with an immediate gold rally. If it doesn�t come, expect gold to continue treading water for the time being.