Gold News & Info

Source: Dr. Bill Musgrave

Austin— Gold traded nearly flat, adding 20 cents to hold steady just under $1,700, as it was oddly caught between rising commodity-demand and falling risk-appetite. Most commodities rose strongly behind positive economic data in the U.S. and China, which lent some support to precious metals. U.S. industrial production jumped in November by the most in two years and the cost of living dropped more than expected behind falling energy costs. In addition, Chinese manufacturing improved in December, fueling hopes of recovery in a key engine of global growth. Still, stalled U.S. budget negotiations prompted risk-aversion, fueling stock market losses and causing speculative money to turn toward cash, pressuring the gold price. Silver slipped 0.2% and while platinum added 0.1%. Palladium jumped 1.5% on the Chinese manufacturing data because of its uses in automobile catalytic converters.

At the Comex close: February gold added 20 cents, to $1,697; March silver slipped 6 cents to $32.30; January platinum picked up $1.70 to $1,614.50; and March palladium jumped $10.40 to $702.05 an ounce.

With the Fed�s announcement of QE4 on Wednesday and its unprecedented decision to peg near-zero interest rates to unemployment, gold may be losing some of its short-term safe-haven appeal. As we saw in yesterday�s 1.2% drop, traders seem to view the Fed�s promise to provide virtually unlimited liquidity as a kind of insurance policy against market losses�a role often played by gold. Of course, this extraordinary expansion of monetary easing will further debase the dollar and increase the risk of inflation. Thus it is causing many analysts to forecast new all-time highs above $1,921, perhaps as early as next year. But in the short term, gold may be caught between higher commodity demand and lower safe-haven interest, as it was today, perhaps resulting in further market softness.

Safe-haven demand in Germany, however, is on the upswing. According to CNBC, a new study from German precious metals group Heraeus Holding GmbH finds almost a third of Germans now consider gold a necessary part of their portfolios. Worries about monetary easing and economic uncertainty are causing them to increase their purchases of physical gold bullion, which they usually keep at home.