Gold News

Gold Ends Week 3% Higher on IndyMac Failure, Record Oil & Falling Dollar

From Chris Mullen at

Gold and silver traded with modest gains in Asia and London on Friday before they soared roughly higher 3% in early New York trade.

Gold and silver then made highs of $967.85 and $18.88 by around 10:00 EST, consolidating their winnings in late morning trade and then falling 1% from their highs before rallying back higher in the last hour and a half of trade.

Gold ended with an advance of 1.95% for the day and nearer 3% for the week. Silver added 2.8% from the week before.

The Gold Price in Euros rose above €60 per ounce for the first time in 16 weeks, platinum gained $49 to $2038.50, and copper gained a couple of cents to about $3.75.

Gold and silver equities rose over 4% by late morning and remained near their highs into the close despite significant losses in the major US indices.

The Dow, Nasdaq, and S&P fell on serious concern about the health and future of Fannie Mae and Freddie Mac who hold or guarantee about $5 trillion worth of mortgages between them.

Early rumors of a government bailout of some sort were not verified by Treasury Secretary Paulson a couple hours into trade, but many expect some sort of deal to be reached over the weekend.

All three indices remained near their lows despite the fact that Fannie Mae and Freddie Mac came off their lows mid-session, but stocks did finally come back a bit and ended only about 1% lower after Bernanke was rumored to have opened the discount window to Fannie and Freddie in late trade.

Following the US close, Californian lender IndyMac was taken over by US regulators and its assets transferred to the Federal Deposit Insurance Corp. (FDIC) following a run by depositors after it ceased all new lending earlier this week.

The US Dollar index fell on continually mounting credit worries. Treasuries fell on speculation the coming rescue of Fannie Mae and Freddie Mac will involve some kind of huge US debt issuance.

Oil rose to a new record high of $147.27 on rumors Israeli warplanes were using US bases in Iraq to practice for an attack on Iran. Prices fell from their highs after the pentagon and the Israeli military denied those rumors, but oil still ended with a decent gain and just 21 cents from new record closing high on geopolitical worries heading into the weekend.

Next week’s economic highlights include Retail Sales, PPI, the NY Empire State Index, and Business Inventories on Tuesday, CPI, Net Foreign Purchases, Capacity Utilization, Industrial Production, and FOMC minutes on Wednesday, and Building Permits, Housing Starts, Initial Jobless Claims, and the Philadelphia Fed survey on Thursday.

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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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