Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rose another 0.3% today to post a weekly gain of 3%, its most in five weeks, on a combination of safe-haven demand and expectations of more monetary easing. Worries about the looming U.S fiscal cliff and the deepening eurozone crisis continue to dominate the markets. Despite the strongest consumer sentiment readings since 2007, U.S. equities were virtually flat today and finished their worst week since June with a 2% loss. The dollar gained alongside gold, as it has for most of the week. Typically, a rising dollar suppresses the gold price because gold is denominated in dollars. When they rise together, it's often a sign of strong flights to safety, and that's been the case this week. The other precious metals were mixed but finished higher for the week. Silver rose 1.1% for a weekly gain of 5.7%; platinum added 1.1% for a weekly gain of 0.9%; and palladium lost 0.5% but finished 1.9% higher for the week.

At the Comex close: December gold rose $4.90 to $1,730.90; December silver gained 36 cents to $32.60; January platinum picked up $16.90 to $1,559.40; and December palladium fell $3.30 to $611.05 an ounce.

Obama's re-election is seen as bullish for gold, and for two main reasons. In the short term, the impasse between the President and Congress over budgetary and taxation policies will make it difficult to avoid the looming "fiscal cliff," a $600 billion combination of spending cuts and tax increases that will be triggered automatically in January, potentially knocking the economy back into recession, if a deal is not reached. Investors have been piling into gold, dollars,and Treasuries since Wednesday for protection, justin case.

In the longer term, Obama's re-election means continued support for Fed Chair Bernanke's extremely loose monetary policies, including QE3 and near-zero interest rates until late 2015. Monetary easing has helped to double the gold price since 2008 because it devalues paper currencies and increases the risk of long-term inflation. Most analysts expect global easing to drive gold to new all-times highs within the next twelve to twenty-four months, if not sooner.

For both of these reasons, gold traders are at their most bullish in eleven weeks, according the latest Bloomberg survey, with more than three-quarters expecting gold prices to rise next week. Investment in gold-backed exchange-traded products (ETPs) rose to an all-time high of 2,596 tons yesterday, with a value exceeding $144 billion.