Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied 1.7%, tracking risk assets higher on speculation of additional easing from China and the Fed. Widely considered the engine of global growth, China's economy grew at a rate of 7.6% in the second quarter, which was stronger than the markets feared but still well below official targets. Growth rates below 8% in previous slumps have triggered aggressive responses from the People's Bank of China, which already cut interest rates twice in the past month. Relieved that Chinese growth wasn't weaker and encouraged by the prospect of further easing, investors shifted strongly into global equities and commodities, with the Dow gaining more than 200 points. Treasury prices and the dollar index fell from recent highs, supporting gold's rally to a 0.8% weekly gain. Silver added 0.8% for the day and 1.7% on the week. Platinum rose 1.6% but lost 1% on the week, while palladium rose 1.9% and gained 0.9% on the week.

At the close: August gold jumped $26.70 to $1,592; September silver picked up 21 cents, to $27.37;. October platinum rose $22.70 to $1,435.20; and September palladium gained $10.85 to $585.65 an ounce.

Another Fed member has weighed in the state of the U.S. economy and QE3. In his first speech since last week's poor payrolls report, Dennis Lockhart of the Atlanta Fed said that "the most recent incoming data and information" are rendering the Fed's prior forecasts and policy premises "untenable." When asked whether he supports QE3, he replied that he's still "on the fence" but his "receptivity has increased" after the weak data of recent weeks. Lockhart is a voting FOMC member. "It's possible another policy decision looms," he added. "My colleagues and I on the (Fed) may confront a decision on whether to respond more aggressively to the economy's apparent weakness." As today's market actions indicate, expectations are growing that more easing is on the way.