Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold added 0.2% as mixed U.S. economic data reinforced the view that the Fed will expand its program of quantitative easing when it meets next week. Consumer sentiment fell more than expected in December, hitting a four-month low because of worries about the fiscal cliff. Unemployment dropped from 7.9% to 7.7% as the economy beat expectations by adding 146,000 jobs last month, according to the latest non-farms payroll report. But the lower rate was largely attributed to more people leaving the workforce, and job gains for September and October were revised lower by 49,000, leaving the overall employment picture fairly weak.

Already buying $40 billion a month in mortgage-backed securities as part of QE3, the Fed is widely expected to expand its program and start buying an additional $45 billion in long-term Treasuries each month in order to drive down unemployment. Today's data did nothing to disabuse traders of this expectation, and helped gold to rise despite a stronger dollar, which typically suppresses the gold price. The dollar gained after Germany's Bundesbank slashed its 2013 forecast for GDP growth to merely 0.5% from 1.6% in the eurozone's largest economy, adding to the likelihood that the ECB will cut interest rates again early next year. The majority of ECB policy makers were reportedly open to cutting rates at yesterday's council meeting anyway, so this projected weakness in Europe's growth engine may tip the scale. Monetary easing is bullish for gold because it devalues currencies and increases inflation risk. All four precious metals edged higher, with silver and palladium adding 0.1%, and platinum gaining 0.4%

At the Comex close: February gold rose $3.70 to $1,705.50; March silver added 2 cents, to $33.13; January platinum gained $6.30 to $1,607; and March palladium edged up 95 cents to $698 an ounce.