Precious Metals Market Report by Bill Musgrave – American Gold Exchange
Gold dipped 0.2% to settle at $1,178 as upward revisions to U.S. economic growth boosted the dollar and reduced demand for alternative assets.
GDP in the U.S. grew 5% from July through September, the Commerce Department said today, rather than the 3.9% previously reported, for the strongest quarter in eleven years. Consumer spending, business investment, and spending on infrastructure all improved by more than earlier estimates.
In a sign that momentum may already be stalling, however, orders for durable goods fell last month by more than expected, and have declined in three of the past four months with little improvement on the horizon. Orders for these big ticket items are crucial for sustaining the manufacturing sector and overall GDP growth, economists say.
In addition, sales of new homes declined to a four month low, taking forecasters by surprise and underscoring a lack of momentum in the housing sector. The new data follows reports that sales of existing homes fell by more than 6% in November, to the weakest level since May.
U.S. equities extended their rally on the revised GDP data, with the S&P 500 and Dow both reaching new all-time highs. The dollar gained on speculation that stronger growth may embolden the Fed to raise interest rates sooner than expected. A stronger dollar typically weighs on gold because it is denominated in dollars for international trade and becomes more expensive to holders of other currencies.
Demand for physical gold is rising in in China and Germany. According to data released today by Degussa, a leading German bullion trader, purchases of physical gold by investors and institutions in Germany rose in November by 40% above the monthly average, to nearly 15 tons, driven by concerns about the economy and financial stability in the Eurozone. On the Shanghai Gold Exchange, rising demand has caused premiums on gold bullion to nearly double to $5 per ounce in recent days, according to Reuters.
The other precious metals were mixed, with silver and platinum gaining 0.5% and 0.8%, respectively, while palladium edged down 0.1%.
At the Comex close: February god slipped $1.80 to $1,178.00; March silver added 8 cents, to $15.87; January platinum gained $9.60 to $1.191.70; March palladium dropped $1.20 to $814.05 an ounce.