Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.2% to close below $1,308 as a strengthening dollar pressured commodity prices across the board. The greenback gained against major rivals after the minutes of the September Fed meeting showed most members still hoping to begin a taper of quantitative easing, the Fed's program of buying $85 billion in long-term bonds each month, later this year.

Tantamount to printing money, QE has suppressed the value of the dollar and supported higher commodity prices by flooding the economy with cheap liquidity, increasing the risk of long-term inflation. A stronger dollar pressures precious metals and other commodities that are denominated in dollars internationally because they become more expensive to holders of other currencies, reducing demand. Oil dropped 2% today, silver lost 2.7%, and platinum and palladium each surrendered 1.5%.

At the Comex close: December gold fell $17.40 to $1,307.20; December silver lost 55 cents to $21.89; January platinum slid $20.70 to $1,383; and December palladium dropped $10.80 to $704.10 an ounce.

The U.S. central bank shocked the markets last month by standing pat on monetary stimulus despite telegraphing for months that a taper was coming. Today's release of the Fed minutes shows a close vote with a solid bias toward tapering by December. Given current U.S. fiscal wrangling, however, most analysts no longer believe a taper is on the table for this year. The FOMC meeting predated the government shutdown and threat of default, which could plunge the global economy back in to recession. President Obama's nomination of Janet Yellen to succeed Ben Bernanke as Fed Chair, also announced today, further suggests a delay in tapering. Yellen was one of the architects of quantitative easing as Fed vice chair under Ben Bernanke and is expected to be slow to withdraw stimulus.