Precious Metals Market Report by Bill Musgrave – American Gold Exchange

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Gold surged 3.6% to close just under $1,220, a five-week high, on safe-haven demand after China’s economy slowed further and Japan suffered a sovereign debt downgrade. In addition, India ended some restrictions on gold imports, opening the door to higher demand in the world’s second-biggest gold-buying nation.

Last Friday, the gold price fell 1% in sympathy with oil after OPEC decided to leave crude production unchanged. It then fell further on Sunday in electronic trade when Swiss voters, as expected, rejected the referendum requiring the Swiss National Bank to hold 20% of its assets in gold.

Today, the metal reversed those losses and then some, gaining more than $42 to close at its highest level since October 29, as oil rebounded 4.6% and Moody’s downgraded Japan’s debt. In its first downgrade since 2011, the ratings firm dropped Japan one notch because of “heightened uncertainty” over the nation’s ability to cut its fiscal deficit. In addition, China’s manufacturing gauge fell to an eight-month low in November, aggravating an economic pullback that is likely to cause further monetary easing in the world’s second-largest economy.

Gold was also supported by anemic retail sales on Black Friday, the day after Thanksgiving, which kicks off the U.S. holiday spending season. Retail sales tumbled around 11% from last year, raising concerns that the recovery in consumer spending, which constitutes roughly 70% of U.S. GDP, might not endure. Further softening could make the Fed less willing to raise interest rates. Higher rates weigh on the gold price by strengthening the dollar, which fell today on the spending news.

The other precious metals were mostly much higher. Silver led the way by gaining a whopping 7.3% and platinum jumped 2.5% while outlier palladium slipped 0.6%.

At the Comex close: February delivery gold surged $42.60 to $1,218.10; March silver jumped $1.14 to $16.69; January platinum gained $30.30 to $1,241.60; and March palladium slipped $5.20 to $808.10 an ounce.

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