Precious Metals Market Report by Bill Musgrave – American Gold Exchange
Gold jumped 1.2%, closing at $1,197 after briefly topping $1,200, as weak U.S. wholesale inflation and upbeat sentiment in Germany undermined the dollar and boosted demand for alternative stores of value. The metal has now gained in three of the last four sessions, rising 3.3% since last Wednesday.
The Bureau of Labor Statistics reported that producer prices rose a scant 0.2% in October after dipping 0.1% in September. In the 12 months through October, the PPI increased by just 1.5%, far below the Fed target of at least 2%.
The dollar fell against a basket of rivals as the soft PPI report caused currency traders to speculate that the Fed may be required to keep interest rates lower for longer in order to prevent disinflation. The currency was further pressured by a rise in the euro after German investor optimism rose for the first time in 11 months, boosted by relief that the Eurozone’s largest economy narrowly averted recession last quarter.
Gold was also supported by reports that Russia continues to be a strong buyer, adding another 35 tons to its gold reserves in October after 37 tons in September. Russia has tripled its gold reserves since 2005, according to the IMF, and now holds around 1,185 tons, the fifth most of any nation. Worldwide central bank purchases are expected to net 400 to 500 tons this year, according to the World Gold Council, as governments try to hedge against currency risk, economic uncertainty, and geopolitical turmoil.
The other precious metals were mostly higher. Silver and platinum followed gold by gaining 0.7% and 0.3%, respectively, while outlier palladium dropped 1%.
At the Comex close: December gold jumped $13.60 to $1,197.10; December silver gained 12 cents to $16.17; January platinum picked up $3.30, to $1,204.60; and December palladium dropped $8 to $776.70 an ounce.