Gold bounced as today's US session began, recovering $645 per ounce after sliding in Asia thanks to a public holiday in Mumbai, India's gold-dealing centre.

Wait-and-see was the policy yesterday of gold traders in the US, and today's rally so far has a lot of short-term hesitation to overcome . A slew of data is due out Thursday and Friday. The Federal Reserve meets today and tomorrow to vote on Dollar interest rates.

"I think the Fed meeting is dominant in people's mind," says Gregory Miller, chief economist at SunTrust Bank in Atlanta. Falling US interest rates would be viewed as positive for gold, since they would encourage debt and increase the supply of money yet further.

"December suggested [the US economy is] past the worst," adds Miller. "If the acceleration is confirmed, then the Fed will be less worried about [slowing] growth and less likely to ease."

But US consumers and corporations don't need lower interest rates to keep growing the US money supply. It's now rising faster than any time since 2001, back above 12% year-on-year according to one new analysis of the missing M3 numbers no longer reported by Washington.

And with each Dollar losing value as the flood of new Dollars rises higher, gold remains the ultimate defence for investors against excessive growth in the money supply.

It's the same story in the UK, where the flood of money is now rising nearly 15% year on year. There are also nearly 10% more Euros in the world than there were this time last year too – the fastest rates of money supply growth since 1990. And it's not just the developed world suffering from a surfeit of money.

"Underlying inflationary pressures remain," the central bank in Mumbai, India warned on Monday. It looks likely to raise Rupee interest rates later this week, but Indian savers and investors won't expect that to slow the surge in debt and new money flooding India's economy. This over-supply of money is driving prices higher as the value of each Rupee shrinks too – just like in Europe, the UK and United States.

India's money supply growth as measured by M3 has accelerated to 20.3% year-on-year reports the Hindu Business Line. The economy grew nearer 8.5% according to Credit Suisse. You can see the over-supply of money right there, now showing up in higher living costs for Indian consumers.

What of the gold supply? For a full and detailed report – free – simply click here and read on...