Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 6% to $1,286, its lowest closing since September 2010, in a broad-based route of global asset classes. Yesterday's statement from Fed Chair Ben Bernanke, saying quantitative easing could end by mid-2014 if the economy improves, triggered a massive sell-off of stocks, bonds, and commodities around the world. While there was nothing really new in his announcement, traders were nonetheless thrown into panic by the explicit mention of easing's eventual end. QE has helped to rally equities by flooding the markets with liquidity and encouraging risk-taking by investors. It has also helped to support higher gold prices by devaluing the dollar and raising the risk of long-term inflation.

The Dow surrendered 350 points, the S&P 500 lost 2.5%, its biggest drop since November 2011, and the Global Dow lost 3.5% as traders flooded into cash. Also weighing on market sentiment was a report that China's manufacturing contracted further last month, threatening the global recovery. The dollar jumped and U.S. Treasurys fell while yields spiked higher. Precious metals, sensitive to a stronger dollar and higher interest rates, were especially hard-hit, with silver plummeting 8.3% while platinum and palladium dropped 4.2% and 4.5%, respectively.

At the Comex close: August gold dropped $87.80 to $1,286.20; July silver lost $1.80 to $19.82; July platinum shed $60.10 to $1,363.80; and September palladium dropped $31.30 to $665.10 an ounce.