Daily Gold Update

Source: American Gold Exchange

Austin— Gold gained 0.7% today as the dollar weakened and mild risk appetite returned. Equities and commodities both edged higher and oil closed at a two-week high over $108. After losing over 3% last week, largely on the Fed's silence about QE3, gold has become attractive to bargain hunters including central banks, which bought around $250 million worth through the Bank of International Settlements, according to Reuters. Gold ETFs also rose for the tenth straight week. Silver gained 1.2% today while platinum and palladium both picked up 0.8%

At the close: April gold gained $11.50 to $1,667.30; May silver added 4 cents to $32.96; April platinum rose $9.20 to $1,684.70; and June palladium rose $5.90 to $707.60 an ounce.

The trend of central banks buying gold to diversify their reserve holdings is strongly on the rise. After being net-sellers for nearly twenty years prior to 2010, they were net-buyers of almost 240 tonnes of gold last year, according to the World Gold Council year-end report, and are expected to buy a similar amount this year. The biggest buyers are emerging-market nations like China, India, and Russia, which are becoming global economics powerhouses but still lag far behind developed economies in their gold holdings.

A study published today on VOX, a policy portal for professional economists set up by the U.K.'s Center for Economic Policy Research, finds that China and India have nearly doubled their gold holdings since 2009, and Russia has tripled. These accelerated central bank purchases "are consistent with the desire of 'super-emerging-markets' to signal their economic might, to diversify their reserves, and to insure themselves during the global turbulence." But they are still far short of the dominant developed economies. The top four gold-holding nations�U.S., Germany, Italy, and France�all have more than 73% of reserves in gold. China, however, has only 1.8%, Russia 9.6%, and India 10% in gold. So we're likely to see more purchases by their central banks going forward, especially when gold goes on sale like it did last week.