Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.7% on safe-haven demand as investors continue to shun risk because of the so-called U.S. fiscal cliff. With this week's elections leaving Washington as divided as ever, the markets fear that lawmakers will fail to reach a deal preventing a major package of spending cuts and tax hikes from taking effect on January 1, potentially knocking the economy back into recession. U.S. equities extended yesterday's sell-off, falling to their lowest levels since August, despite the positive news that jobless claims fell again and U.S. exports rose strongly in September. The dollar rose for a second day, muting gold's gains, as the deepening eurozone debt crisis pushed the euro to a two-month low. In another expression of fiscal-cliff anxiety, 30-year Treasury bonds received their highest demand of the year at auction today. The other precious metals also picked up some safe-haven buyers, with silver gaining 1.8%, platinum adding 0.2%, and palladium picking up 0.7%.

At the Comex close: December gold gained $12 to $1,726.00; December silver rose 58 cents to $32.24; January platinum added $3, to $1,540.50; and December palladium increased by $4.05 to $617.45 an ounce.

Higher gold prices are also being supported by expectations of additional monetary easing in Europe. ECB President Mario Draghi reiterated today that he stands ready to undertake Outright Monetary Transactions (OMTs), his QE-styled program of bond purchases, whenever eurozone governments fulfill the necessary conditions and formally request aid. That might happen soon. Economic confidence in the eurozone fell to a three-year low last month and conditions are again deteriorating throughout the region. Bond-yields are rising in Spain and EU ministers have decided to delay aid to Greece because of concerns about political instability. Even Germany, the largest and strongest economy in the region, is nearly in recession, with growth grinding to halt and business confidence falling to its lowest in more than two years. Like quantitative easing, which helped to double the gold price since 2009, OMTs are expected to boost demand for gold as a long-term store of value and hedge against inflation.