Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold dropped 1.3% as strong U.S. consumer spending and Chinese trade data nudged investors into riskier assets. Domestic retail sales jumped 1.1% in September, beating expectations, and figures were revised higher for July and August, too. Consumer spending accounts for more than 70% of GDP, so rising retail sales should give the recovery a boost. In addition, China's exports rose by nearly 10%, far more than forecast, suggesting an upswing global consumer demand. The positive data prompted a continuation of Friday's profit-taking from gold's 11% rise last quarter. The Dow rallied by nearly 100 points and the Global Dow gained by 0.5%. The other precious metals also pulled back, with silver leading the way with a 2.8% loss. Platinum and palladium dropped 1.6% and 1%, respectively.

At the Comex close: December gold dropped $22.10 to $1,737.60; December silver lost 93 cents to $32.74; January platinum fell $27 to $1,632.30; and December palladium for slipped by $6.45 to $632.60.

Like last week's consumer sentiment report, the positive retail data caused some concern about a premature ending to QE3, which the Fed has vaguely tied to economic improvement. Today, New York Fed president William Dudley reassure the markets that the Fed will be very slow to stop the easing. An influential voice, Dudley said current policy will continue for a "considerable time after the economic recovery strengthens," and the Fed will act only once "we became confident that the recovery was securely established." Many analysts, including Credit Suisse, Deutsche Bank, Commerzbank, and PIMCO, have recently raised their gold price forecasts because of the risk of long-term inflation presented by QE3.

Holdings in gold-backed ETFs rose by another 282,000 ounces last week, marking the eleventh straight week of increased inflows. Gold holdings in these products are up by 9.6% this year after rising by 7.9% last year, according to Bloomberg. Despite these strong inflows, Barclays report today that more investors are moving into physical gold and away from paper gold and. After making initial investment in ETFs, they "get educated on how the market works," Barclays says, and migrate to physical gold for greater control and security.