Gold Adds 6.2% for the Week to $1,000 and Hits New Euro Highs; Stocks Sink on Bank-Nationalization Fears

From Chris Mullen at GoldSeek.com...

Gold and silver screamed higher in London on Friday, breaking through $1,000 and $14.60 in the last couple of hours of New York trade and ending near those highs with a gain of 2.5% and 3.4% for the session respectively.

Gold finished just $4.50 below its record close of $1,003.70 set on March 18th last year, up more than 6.2% for the week.

The broad S&P index of the top 500 US stocks meantime lost almost 6.9%, down to 770 by Friday's finish.

The US Dollar index reversed early gains and ended markedly lower on speculation over US bank nationalization and also on rumors of new European intervention and stimulation that lifted the Euro in afternoon trade.

Oil fell while Treasury bonds rose on persistent worries about the economy and the sustainability of the entire financial system.

Today Senator Christopher Dodd, chair of the Senate Banking Committee, sent the already reeling shares of major US banks to nearly two-decade lows by saying "short term" nationalization might prove necessary.

That also sent the Nasdaq markedly lower, while the Dow fell below Thursday's 6-year lows.

All three major Wall Street indices rallied back higher in the last two hours of trade to actually end the day with only modest losses after having traded roughly 3% lower earlier Friday.

"As we saw the Gold Price attack the $1,000 level for the second time, but with far more force, institutional investment demand continues to drive Gold Investment," says Julian D.W. Phillips, of the GoldForecaster.com.

"Forcing the closure of 'short' positions on COMEX Gold Futures and stunting both jewelry and Indian demand, where higher prices have at least temporarily sidelined these buyers, demand for the shares of the Gold ETF trust funds shows a mindset change is taking place

"We do not believe these price levels will deter long-term institutional investors.   Expect more of the same in the days ahead."

Gaining barely half the percentage move of Gold Bullion for the week, Gold Mining and silver equities rose about 3% at Friday's open before they pared their gains slightly midmorning. They then rose to new highs for the session heading into the afternoon and the miners ended with roughly 4% gains on the day.

The all-time closing highs set on 14 March 2008 are 206.87 for the XAU, 514.89 for the HUI, and 1553.31 for the GDM. While all three indices have more than doubled from their lows of four months ago, they still remain about 50% off those all-time highs.

Silver this week remained well short of its 27-year high at $20.64, set on 5th March 2008. The Gold Price in Euros shot to a new record high at €793 an ounce.

Platinum gained $12.50 to $1081.50 but remains barely half its record peak of 11 months ago.

On the economic front, US consumer price data showed an unexpected advance of 0.3% for January, or some 0.2% excluding "volatile" fuel and food prices.

Next week's economic highlights include the S&P/CaseShiller Home Price Index and Consumer Confidence on Tuesday, Existing Home Sales on Wednesday, Durable Goods Orders, Initial Jobless Claims, and New Home Sales on Thursday, and GDP, Chicago PMI, and Michigan Sentiment on Friday.