Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.3% to mark its fourth losing session as optimism about the stock market stoked risk appetite and diverted money away from safe havens. Investor confidence in Germany jumped by the most in almost three years, driving European stocks higher. And an uptick in merger activity in the U.S., suggesting that corporations may finally start spending their horded cash, propelled the S&P 500 to a five-year high. Silver tracked gold lower, falling 1.5%. Platinum and palladium gained 1.1% and 1.5%, respectively, on supply disruptions in South Africa and strengthening demand for automotive catalytic converters.

At the Comex close: April gold slipped $5.50 to $1,604; March silver lost 45 cents to $29.40l; April platinum jumped $18.70 to $1,696.40; and March palladium picked up $11.45 to $764.60 an ounce.

Tomorrow's release of the minutes from January's FOMC meeting will be scoured by gold traders for notable changes in the Fed's attitude toward continued quantitative easing. Recent speeches by Fed Chair Ben Bernanke and Vice Chair Janet Yellen have strongly supported ongoing easing, and little has shifted in the economy to cause a change in policy. Nonetheless, December's minutes surprised many by revealing pointed discussions about how soon to end the Fed's monthly purchases of $85 billion in long-term bonds. Easing is bullish for gold because it cheapens the dollar, keeps real interest rates negative, and raises the long-term risk of inflation. If January's minutes show stronger advocacy for ending this program, the gold price could see further short-term weakness as hedge funds shift out of long positions.

However, with the world's major economies struggling for growth, it is unlikely that the Fed will prematurely strengthen the dollar�or prevent its further weakening�by ending easing any time soon. As Goldman Sachs told clients recently, the world's big economies are locked in a "growth war" that only looks like a currency war, with currency devaluation as their main weapon. Jeffries Managing Director David Zervos makes a similar point in a note to clients today, as Business Insider reports: "The objective for central bankers is to lower real rates faster than the next guy � that is the essence of the growth war. The country who gets there first wins the growth." In other words, growth in the current global environment is seen as a zero-sum game that requires, at least for now, ever-cheaper currencies for competitive advantage. And that's good news for gold.