Today's AM fix was USD 1,756.75, EUR 1,344.31 and GBP 1,081.81 per ounce.
Yesterday's AM fix was USD 1,767.25, EUR 1,349.36 and GBP 1,089.42 per ounce.
Silver is trading at $34.16/oz, €26.24/oz and £21.10/oz. Platinum is trading at $1,662.00/oz, palladium at $673.60/oz and rhodium at $1,350/oz.
Gold fell $14.00 or 0.79% in New York yesterday and closed at $1,757.60. Silver dropped to as low as $33.806 before it rebounded back higher, and finished trading with a loss of 1.76%.
Gold inched lower in quiet volatile trade on Tuesday after equity and commodity markets pulled back overnight and investors booked profits from the recent rally created by the US Fed's QE3 launch.
However the current monetary climate of central bank money printing will cause inflation and this is increasing the appeal of gold for investors.
Platinum also fell, as news announced about Japanese closures of car plants in China due to the escalating territorial dispute between the two nations.
The China-Japanese tensions have been simmering for some time and this largely unacknowledged geopolitical risk is a real risk to markets.
The tensions have led to protests and attacks on Japanese companies such as car makers Toyota Motor Corp (NYSE:TM) and Honda Motor (NYSE:HMC), forcing them to cease operations and there have been hints of trade sanctions.
Platinum is used as an auto catalyst and is a necessary part for production in the automotive industry.
Central banks are pursuing quantitative easing, in effect, printing and electronically creating money, which is extremely easy for central bankers to do.
Conversely, gold is called a precious metal for a reason. Gold remains very precious, finite and very rare. All the gold in the world if made into one large gold bar (0.9999 pure) would be 21 metres cubed and would fit on the centre court of Wimbledon.
Gold needs to be extracted from the bowels of the earth in a gold mine. It needs to be found and it needs much capital and technology and specialist labour to get small amounts of gold out of the ground.
The process of development can take a very long time and many gold mining companies become insolvent and are not successful in producing even one ounce of gold. When companies are successful, it is often only many years later that one ounce of gold is produced.
This difficult task means that while U.S. money supply in the form of M2 has risen by 30% since June 2008, gold production has fallen by 1.7%, despite rising gold prices.
While the concept of "peak oil" has been widely debated in markets, that of "peak gold" is less well known. This will change in the coming years.
Rising cash costs have been fueled by declining ore grades and higher raw material costs - especially with regard to higher oil and energy costs. Mining remains a very energy-intensive business.
Ore grades have declined 8% annually, while cash costs have had a 14.1% CAGR since 2005 for senior producers.
Cost inflation has been driven by fuel, labour and key consumables, which have only been partially mitigated by the rising gold price.
Global gold production remains at its level of the late '90s, even though prices have risen to over $1,700 per ounce from $252 per ounce in 1999 or roughly 16% per annum in dollar terms.
Only Rio Tinto (NYSE:RIO) and Ivanhoe's Oyu Tolgoi mine in Mongolia stand out as a major new gold mines expected to begin production in the near future.
Bulls note that global production has remained impervious to the price of gold. This may continue to be the case due to the increasingly obvious geological constraints being seen in the gold mining sector.
Resource nationalism is beginning to become an important factor again. This will also almost certainly affect supply at a time when demand is increasing from people throughout the world and many hedge funds, pension funds and central banks due to geopolitical, systemic and monetary risks.
The lesson of QE is that fiat currencies increasingly grow on trees. Gold does not.
This is the primary reason that gold will continue to protect investors in the coming months.
Charts and data courtesy of Bloomberg Industries Kenneth Hoffman and the Precious Metal Mining Team
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.