Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rose for the fifth time in six sessions, adding 0.2% today after more soft data out of China raised the likelihood of additional measures to stimulate growth in the world's second largest economy. Compounding yesterday's weak factory report, Chinese export and import growth slowed considerably last month, leading analysts to believe the government will utilize aggressive monetary easing and increased stimulus spending on infrastructure to reignite the economy. Easing would devalue the yuan and potentially increase inflation, while stimulus spending would drive demand for commodities. Both are seen as bullish for gold, which also received some support from worries about food inflation after the USDA projected corn-yields to fall by 13% this year because of the deep Midwestern drought. The other precious metals did not follow gold's lead. Silver dipped 0.1% while platinum and palladium fell 0.9% and 0.8%, respectively.

At the close: December gold rose $2.60 to $1,623.70; September silver dropped 4 cents to $28.06; October platinum fell $12.90 to $1,399.90; and September palladium lost $4.50 to $582.20 an ounce.

Another leading member of the Federal Reserve has come out strongly in favor of more monetary stimulus. Earlier this week, Boston Fed president Eric Rosengren called for another round of quantitative easing, or QE3, advocating an open-ended program of buying Treasurys and mortgage-backed securities until the economy is back to full strength. San Francisco Fed president John Williams says he, too, is now convinced it's time for QE3 because of persistent unemployment and stagnant growth. A voting member of the FOMC this year, Williams was against more easing as recently as May. "When you weigh the costs and benefits," he said in an interview with the San Francisco Chronicle yesterday, conditions are now "definitely tilting toward taking further action." Considered a moderate, Williams is typically within the mainstream of opinion at the Fed. It's widely expected that Fed Chair Ben Bernanke will use the Fed's annual retreat in Jackson Hole at the end of the month to announce any new policy interventions.