Gold News

Gold ends Weds 1.6% lower despite weak US home sales; Fed warns on oil prices

From Chris Mullen at

Spot Gold Prices
fell about $4 in Asia on Wednesday, dropped another $4 in London, and then fell even further in New York to see more than 2% losses at $670.30 by late morning.

The Gold Market then rebounded about 0.5% off its low in afternoon trade, but it still ended with a loss of 1.56% for the day.

Silver dropped to as low as $13.02 by late morning in New York before it also rebounded a bit into the close, but it still ended with a loss of 2.02%.

The Euro Price of Gold fell to about €491, platinum lost $4 to $1,318, palladium lost $2 to $364, and copper fell roughly 10 cents to about $3.57.

In the exchange-traded gold funds, the London Stock Exchange's LyxOr GBS added 1.55 tonnes for the day.

Gold and silver equities fell roughly 4% by 11:00 New York time, as the general markets swooned along with the metals. The miners then rebounded in afternoon trade and ended with only about 1.5% losses.

Economic data showed existing home sales in the United States fell 3.8% to the lowest since November 2002 last month. The median price paid rose for the first time in 11 months thanks declining sales of lower-valued homes versus more expensive home sales that have not declined as much.

US mortgage applications also fell, down to a 5-month low according to the Mortgage Bankers Association's weekly report.

The Federal Reserve's Beige Book showed mixed concerns overall as it weighed moderately expanding economic growth versus inflation worries. "Most districts said that residential construction and real estate activity continued to decline," the Beige Book said. "Almost every region said that oil and gasoline prices were either rising, high, or 'an issue'," the report added.

Today at 13:30 London time will bring US initial jobless claims for the week-ending 21st July, expected at 310,000. Durable Goods Orders for June are expected to show a 2.0% rise. Ninety minutes later, at 10:00 New York time, new US home sales for June are forecast at 900,000 and the Help-Wanted Index for June is expected to read 27.

Back in Wednesday's market, crude oil eventually rose over 3% to break back above $75 per barrel after a mixed inventory report. US crude inventories fell more than expected while gasoline inventories built more than expected. Crude inventories fell 1.1 million barrels, gasoline inventories built 800,000 barrels, distillates built 1.5 million barrels, and refinery utilization rose 0.7% to 91.7%.

A burst pipeline in Vancouver and gas plant explosions in Dallas encouraged buying as "technical issues" briefly shut down electronic trading of some commodity futures on the CME Globex and spurred short covering. Floor traders easily ran up the price during the open outcry session.

The US Dollar index rebounded fiercely from a technically oversold condition off the key 80.0 level tested Tuesday. The move came despite weaker than expected US housing data as traders booked impressive recent gains from the Euro and many other world currencies.

US Treasury bonds rose on those poor existing home sales numbers and credit concerns after Chrysler postponed a $12 billion auto loan deal.

In the stock market, the Dow rose over 100 points at the open on strong earnings before it plummeted and saw slight losses by late morning. It then rallied back higher for most of the rest of trade and ended with decent gains. The Nasdaq and S&P followed similar patterns as traders watched a rising oil price as well.

In the gold and silver mining industry, Freeport-McMoRan's (FCX) second quarter profits, Meridian gold's (MDG) second quarter financial results, IAMGOLD's (IAG) new resource estimate and exploration update, Randgold's (GOLD) exploration, Harmony's (HMY) gold reserve's, Goldcorp's (GG) and Silver Wheaton's (SLW) completed Penasquito transaction, and Palmarejo's (PJO.V) drill results were among the big stories.

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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