Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.5% after muted core consumer inflation and growing optimism about Spain weakened the dollar. The consumer price index rose by 0.6% last month behind by higher gas prices but core inflation, which excludes food and fuel, rose by merely 0.1%. Because the Fed views core CPI as a more reliable measure of long-term inflation trends, today's data was seen by the markets as giving the Fed plenty of room to continue or expand QE3. Treasuries fell while global stocks and commodities rallied strongly. Reports that Spain is preparing to ask the ECB for a bailout also hurt the dollar and helped gold. The other precious metals tracked gold higher, with silver rising by 0.7%, platinum 0.8%, and palladium 1%.

At the Comex close: December gold gained $8.70 to $1,746.30; December silver added 22 cents to $32.96; January platinum rose $12.90 to $1,645.20; and December palladium gained $6.35 to $638.95 an ounce.

Stronger economic data is beginning to propel commodity demand for gold again. U.S. Factory output rose by 0.4% last month, beating expectations and indicating that a key part of the recovery is gaining traction. This news comes after the strongest gains in retail sales in two years, and the largest increases in consumer sentiment since the recession began five years ago. Even the housing market is beginning to stabilize, with confidence among U.S. homebuilders climbing for a sixth straight month in October. As we've said, gold is unique because it can trade as a commodity or a currency, rising with risk appetite or on safe-haven demand. Its commodity demand is now swinging back into focus. That's good news for the economy and, as long as core inflation remains low enough to suit the Fed, good news for gold.