Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.3% as skepticism over the weekend's bailout of Spanish banks combined with lingering concerns about Greece's pending election to drive investors into safe havens. U.S. equities and oil fell while the dollar rose alongside gold for the second straight session, underscoring risk-off sentiment. Treasury prices rose and silver added 0.5% while platinum and palladium, fueled by encouraging Chinese export data, rallied 1.7% and 2.2%, respectively.

At the close: August gold added $5.40 to $1,596.80; July silver picked up almost 15 cents to $28.62; July platinum gained $24.20 to $1,449.30; and September palladium rose $13.15 to $625.15 an ounce.

As expected, Spain asked the EU on Saturday for 100 billion euros in loans to prop up its collapsing banking system, making it the fourth eurozone country to need a bailout, after Ireland, Portugal and Greece. With few details published, initial market euphoria quickly gave way to nagging worries about where the money will come from and who'll be on the hook in case of eventual default, pushing Spanish and Italian bond yields higher. Next Sunday's runoff election in Greece adds further uncertainty. Fears are high that the new government may renege on Greece's bailout terms and force it into default, thereby driving it out of the euro and spreading the risk of debt contagion.

Europe's spreading debt crisis is spurring record-high demand for gold in China. According to Bloomberg, gold imports by mainland China from Hong Kong climbed 65% in April to a record 103.6 tons. Chinese gold investment hit a record 98.6 tons in the first quarter of 2012�13% higher than the year before�and is expected to grow by another 10% this year as individual investors seek protection from weakening currencies and sovereign debt problems. Overall Chinese demand, including central bank purchases, may reach 1,000 tons this year, according to the World Gold Council.