Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.5% after mildly upbeat economic data and comments from influential FOMC members spurred more risk appetite. Pending home sales rose to a six-year high and consumer spending rebounded slightly in May, while last-week's jobless claims receded a bit. The data was strong enough to convince traders that the recovery is progressing yet weak enough to reassure them that the Fed won�t taper stimulus soon. The Dow gained 114 points and the Global Dow added nearly 1%. The other metals were mixed, with silver falling 0.3% while platinum and palladium, more directly tied to industry, gained 1.6% and 2.7%, respectively.

At the Comex close: August gold fell $18.20 to $1,211.60; July silver slid six cents to $18.53; July platinum added $21.50 to $1,325.20; September palladium gained $17.45 to $650.70 an ounce.

Trying to sooth market fears about reductions in easing, New York Fed President William Dudley asserted today that the Fed is far from cutting its assets and any tapering will depend on the economic outlook, not calendar dates. Richmond Fed President Jeffrey Lacker said separately that the central bank isn�t close to trimming its $3.47 trillion balance sheet, forecasting "a couple more years of sluggish growth." Dudley and Lacker are the latest in a series of Fed members trying to undo the damage caused last week when Ben Bernanke said quantitative easing could taper this year and end by mid-2014. The prospect of reductions in liquidity caused near-panic in the markets, driving stocks and gold prices much lower while the dollar and long-term interest rates spiked higher.

The recent fall in gold prices is pressuring miners to suspend operations because production is becoming unprofitable. According to Nick Holland, CEO of Gold Fields LTD, a major producer, gold under $1,500 makes production unsustainable. Given ongoing global demand for physical gold (if not bullion-backed ETFs), mining suspensions alone are likely to put a bottom under prices and push gold higher as tighter supplies affect the market.