Gold News

Gold closes New York unchanged as Fed fails to reassure Wall Street

From Chris Mullen at

Spot Gold Prices rose a few Dollars in Asia on Tuesday before they fell back near unchanged in London and traded mostly slightly higher in New York, slipping again by the close and ending with a gain of just 0.08%.

Silver dropped near $11.50 in London before it rebounded in New York and saws gains over $11.80. But it too then fell back off for the rest of trade and ended near its low with a notable loss of 2.31%.

Euro Gold Prices fell near €487 per ounce, platinum gained $1 to $1,244, palladium lost $11 to $317, and copper fell slightly to about $3.20.

Gold and silver equities remained in a tight range near unchanged throughout the day and ended with small gains.

There were no major economic reports today, but there were several comments from various officials about the recent credit problems. US Treasury Secretary Paulson was interviewed by CNBC and urged patience about liquidity returning to normal over time. Federal Reserve Bank of Richmond President Jeffrey Lacker noted at a luncheon that “financial market volatility, in and of itself, doesn't require a change in the target federal funds rate.” Senator Dodd also spoke after meeting with Paulson and Bernanke today and noted that Bernanke would use “all of the tools at his disposal.”

Also making news was a report showing that mortgage foreclosure filings reported in the US last month jumped 93% from July '06 and rose 9% from June. There are no major economic reports due out tomorrow.

In the broader markets, oil fell under $70 as energy companies reported that any damage to infrastructure done by now weakening Hurricane Dean was minimal at worst.

The US Dollar index fell in early trade on the outlook for a rate cut by the Federal Reserve, but it rebounded to close higher after comments from several officials indicated that any moves from the Fed may not happen until their next scheduled meeting on September 18th.

The flight to quality in short-term US Treasuries continued, but some gains were pared after an auction for one-month bills drew worse than expected demand.

The Dow, Nasdaq, and S&P remained mixed and near unchanged throughout the day.

"Gold is standing its ground well after the horrendous financial tsunami that swept through the credit markets last week," says Julian Phillips of the "All is not over on that front we believe. It all depends on whether confidence was calmed or crippled. After all, the problems lay with the investors, not their investments.

"We continue to believe that the consumer remains the driver of the US economy as he has done over the last few years. But he is weighed down and not able to turn back the wave of credit criteria tightening, which led to the freezing of the credit markets last week.

"It is clear that the Fed will have to convince the consumer as well as the financial institutions that all is well with lower interest rates, or his spending restraint will kill growth.

"Ben Bernanke of the Fed knows this, and while he has started to ease interest rates – mainly for the financial institutions – he needs to convince the consumer with lower rates or panic will hit again.

"Either way, on the back of the beginning of the autumn gold season, gold is set to be a strong place to protect oneself from the excessive volatility we have just seen. The support has shown its strength already."

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Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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