Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold finished 1.5% lower as yesterday's Fed-inspired sell-off continued. A day after the minutes from the FOMC's December meeting signaled the possibility that quantitative easing (QE) may be discontinued sometime this year, the paper-gold market knee-jerked lower as hedge funds and large speculators cut their bullish bets to a four-month low. QE has helped the gold price to double since 2008 because it devalues the dollar and increases the risk of long-term inflation. Gold futures fell by as much as $48 in intraday trading before rebounding by $23 after a disappointing U.S. non-farms payroll report reminded traders that accommodative monetary policies will be in place for quite some time. The other precious metals followed gold lower, with silver dropping 2.5%, platinum 1.4%, and palladium 1.2%.

At the Comex close: February gold dropped $25.70 to $1,648.90; March silver fell 77 cents to $29.95; April platinum lost $21.40 to $1,558.50; March palladium shed $8.65 to $688.50 an ounce.

Today's jobs report showing unemployment mired at 7.8% was a reality-check on the market's over-reaction to the Fed minutes. During its last meeting, the FOMC declared its intention to continue monetary easing until unemployment falls below 6.5%. Nothing has changed in the Fed's approach and its target remains as far away as ever. Unfortunately, high unemployment and reduced economic growth are probably with us for a long time to come. But even if QE were withdrawn tomorrow, slow growth and deflationary pressures in the global economy will likely keep interest rates near zero for a couple of years, at least, meaning real interest rates will remain negative, which is bullish for gold. And other central banks�the ECB, Bank of Japan, People's Bank of China�are expected to maintain and expand their loose monetary policies in 2013, debasing currencies and increasing gold's attraction as an alternative store of value.

Nearly three-quarters of the gold analysts surveyed by Bloomberg expect gold prices to rise. And Credit Suisse this week forecast an average gold price of $1,740 in 2013, a new annual record.