Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rose nearly 1% to end at a two-week high after Fed Chair Ben Bernanke signaled support for continued monetary easing, stimulating demand for gold as an alternative store of value. Speaking in Michigan yesterday, Bernanke downplayed the inflation risks of quantitative easing, the Fed's program of buying $85 billion in government bonds each month. Answering critics like Richmond Fed President Jeffrey Lacker, whose recent calls to end easing helped to nudge gold lower last week, Bernanke reassured investors that the Fed's measures to stimulate the economy will not end prematurely.

Separately, Boston Fed President Eric Rosen said the conversation about when to withdraw stimulus shouldn't begin until unemployment falls below 7.25% from its current level of 7.8%, and the amount of QE could be increased if little progress is made. Rosen is the fourth prominent Fed official in the past two days to support more QE, which has helped the gold price to double since 2008. The other precious metals followed gold higher, with silver and palladium both gaining 1.4%. Platinum jumped 1.9%, trading at a premium to gold for just the second time in 24 months, after Anglo-American Platinum, the world's largest producer, announced the closure of some of its mines.

At the Comex close: February gold rose $14.50 to $1,683.90; March silver gained 42 cents to $31.53; April platinum jumped $31.70 to $1,689.90; and March palladium added $10.05, to $713.35 an ounce.

Gold was also supported today by indications that Germany will repatriate its gold reserves held by the New York Fed and other central banks, where they've been stored for years under the pretext of greater security. Germany owns the world's second-largest gold reserves, less than a third of which is domiciled at home, and has apparently become uneasy with so much of it in the possession of other central banks. Pimco founder Bill Gross speculated that it's a sign that "central banks don�t trust each other" in the current climate of currency debasement. The move also raised questions about Germany's ultimate faith in the euro, as a shift to a national currency would be facilitated by anchoring it in gold. The market took Germany's decision, which is expected to be announced officially tomorrow, as a vote of confidence in gold as the international currency of last resort.