Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied 0.6% as geopolitical concerns spurred safe-haven demand and soft data from the Philadelphia Fed region encouraged fresh hopes of monetary easing. Oil prices rose to a six-week high above $92 a barrel , pulling gold higher, after a bomb in Bulgaria killed several Israeli vacationers, prompting Israel to blame Iran and threaten retaliation. A separate bombing in Syria killed several government insiders. This increasing friction in the Middle East carries the potential to interrupt oil supplies and is driving speculators to bid up prices. In addition, record-high corn prices fueled by the worst U.S. drought in 50 years helped to spur commodity-demand for precious metals as an inflation hedge. Silver rose 0.4% while sister metals platinum and palladium added 1.4% and 1.3%, respectively.

At the close: August gold rallied $9.60 to $1,580.40; September silver rose 12 cents to $27.22; October platinum added $18.90 to $1,423.10; and September palladium rose $7.30 to $584.85 an ounce.

One day after Fed Chair Ben Bernanke disappointed investors by refusing to suggest a timetable for additional monetary stimulus, expectations of more easing are building again because of another spate of very soft economic data. The new Business Outlook Survey from the Philly Fed shows labor market conditions have deteriorated strongly, dropping 10 points to the second negative reading in two months. Factory activity also shrank in July for the third month, though at a less severe pace. Furthermore, the Conference Board's index of leading economic indicators fell more than expected in June; sales of existing homes fell by 5.4% to an eight-month low; and jobless claims rose more than expected.

In recent months, bad economic news like this has tended to strengthen the dollar and weaken stocks as investors took shelter in cash and Treasurys. Today, the dollar and Treasurys fell while stocks rallied, suggesting investors are feeling comfortable that the Fed will come to the rescue sooner or later, despite Bernanke's testimonial reticence before the Senate this week.