Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold tumbled over 3% and the dollar spiked higher as another round of weak U.S. data combined with deepening skepticism about the eurozone to trigger a wave of risk aversion. Yesterday's Federal Reserve decision to renew Operation Twist rather than undertake more quantitative easing also weighed on the markets. Treasury prices rose on safe-haven demand while commodities and equities sold off, with oil falling below $80 per barrel and the Dow plummeting more than 250 points. Silver fell a whopping 5.5% while platinum and palladium slid 1.9% and 1.8%, respectively.

At the close: August gold lost $50.30 to $1,565.50; July silver shed $1.55 to $26.84; July platinum fell $28.20 to $1,438.60; and September palladium dropped $10.95 to $608.55 an ounce.

Today's reports confirm that momentum in the U.S. economy has clearly stalled. Manufacturing in the Philadelphia Fed region contracted by the most in a year; existing home sales fell 1.5% last month; and firings are on the rise in the U.S. labor force. Despite the Fed's tepid response yesterday, Wall Street's top bond firms still see a 50% chance of quantitative easing, according to a Reuters poll.

News from the continent is no better. Spain's borrowing costs spiked to a new euro-era record as independent auditors said its banks will require as much as $78 billion in additional capital to remain solvent. Eurozone manufacturing output shrank at its fastest pace in three years in June. Moody's is preparing to downgrade banks in the U.K. And investors are beginning to lose faith that G20 leaders can fix Europe. What's more, Chinese manufacturing contracted again. All of this grim news is driving investment money into cash and gold is getting swept along in the pervasive liquidations. Meanwhile, Bloomberg reports that Russia has taken advantage of lower gold prices to add 500,000 ounces of gold to its reserves.