Gold News

Gold Slips Back as Stocks Surge on Fannie, Freddie Bail-Out

From Chris Mullen at

Gold rose $19 to $818.20 by early trade in New York on Monday before it fell back to $796.75 by early afternoon.

Gold then rallied back higher in the last hour of Wall Street business and ended at about unchanged. The price then slipped further in after-hours "access" trade.

The US Dollar index rose on the Fannie and Freddie bailout plan – both are now under government control in a conservatorship managed by the FHFA – as some argue that it proves the US has the power to do anything needed to protect the currency.

Other countries may not have the ability to solve their own various credit crises in similar ways. They simply do not have the "bazooka" that Paulson has been given.

On the other hand, the rescue points out that things have gotten so bad to require such a large solution. Should this fail to restore confidence, what else can be done?

Treasury bonds rose on mortgage-related buying in response to the government’s bailout. The Dow, Nasdaq, and S&P rose markedly at the open before they sold back off a bit midday, but they then rallied back higher in the last hour of trade and ended with notable gains.

Silver rose nearly 3.5% to $12.66 in Asia, but it then fell back off for most of the rest of trade and ended near its low of $11.88 with a loss of 2.1%.

The Gold Price in Euros rose to about €567, platinum lost $14 to $1344, and copper fell slightly to about $3.11.

Gold and silver equities fell for most of trade and ended with over 4% losses.

Oil rose in early trade on worries over Hurricane Ike, now approaching the Gulf of Mexico. But Dollar strength again took oil lower in late morning action, before it rose to find a slight gain by the close.

Traders are now awaiting the outcome of the Opec oil cartel's meeting on Tuesday. Many expect a production cut at some point, but few seem to agree about when that cut may come.

Growth in US consumer credit for July was shown to be just $4.6 billion against $11bn in June and $8.5bn expected.

Tuesday at 15:00 GMT brings the Pending Home Sales report for July – expected at minus 1.4% - plus the Wholesale Inventories report for July, expected at 0.7%.

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Chris Mullen is chief content manager of the GoldSeek family of websites, a leading source of gold news, comment and mining-stock data for private and institutional investors.

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