Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.3% to close just over $1,349 after another round of soft economic data boosted safe-haven demand. In electronic trade after hours, however, the metal quickly gave up those gains and dropped to $1,342 after the Fed's policy statement, following its two-day meeting that ended today, stood pat on stimulus but suggested that a December taper remains possible.

ADP reported private-sector employment growth slowing in October, as companies added the fewest jobs since April. In addition, consumer inflation ticked up 0.2% for a yearly rise of just 1.2%, well-below the Fed's target of 2%.

Following a litany of similarly weak data in recent weeks, the Fed elected to hold quantitative easing at current levels of $85 billion per month, as expected. Before today's announcement, the consensus among economists was that the Fed would refrain from tapering QE until March, especially after the recent government shutdown and near-default on the U.S. debt-limit shaved around 0.3% from GDP and undermined confidence in the recovery. Tantamount to printing money, QE devalues the dollar and increases the risk of long-term inflation, boosting demand for gold as a store of value.

Whereas traders were hoping for language making a March taper semi-official, the text of the Fed's announcement suggested a taper may still come as early as December. Noting "underlying strength" in the economy and improving financial conditions, the statement echoed September's message that that the FOMC would like to begin scaling back stimulus. As traders digested their disappointment, the dollar rallied while equities receded. Gold had risen as high as $1,360 in intraday trading before rolling back. Silver jumped 2.2% while platinum and palladium closed 1.2% and 0.3% higher, respectively.

At the Comex close: December gold gained $3.80 to $1,349.30; December silver climbed 49 cents to $22.98; January platinum picked up $18 to $1,479.90; December palladium added $2.45, to $749.50 an ounce.