Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 2.2% as the dollar extended its gains against other major currencies, particularly the Japanese yen. One day after breaking the 100-yen barrier for the first time in four years, the greenback climbed above 101.5 on a combination of record-high monetary easing from the Bank of Japan and improving prospects for the U.S. job market. The dollar also gained against the Australian dollar and the euro. Because gold and other commodities are denominated in dollar internationally, they become more expensive to foreign investors when the dollar strengthens.

In order to pull its economy out of persistent deflation, Japan has launched a $1.4 trillion stimulus program to double its monetary base within two years. Traders and Japanese hedge funds, which are large gold investors, are shifting into equities and the U.S. dollar, which is pressuring the gold price. In addition, ETF outflows in the U.S. continue as institutional traders seek higher-risk assets like equities, seeing little need for hedges against inflation of around 1.2%. Gold finished the week down 1.9%. Other precious metals also fell, with silver dropping 1.1% today to close the week with a 1.5% loss. Platinum dropped 2% on the day and 1% on the week, while palladium fell 1.3% today but notched a weekly gain of 1.8%.

At the Comex close: June gold tumbled $32 to $1,436.60; July lost 25 cents to $23.66; July platinum fell $30.50 to $1,486; and June palladium lost $9.05 to $705.70 an ounce.