Gold Ends Tues 0.2% Lower as US Bank Bail-Out Fails to Buoy Stocks or Squash Frannie Yields
From Chris Mullen at GoldSeek.com...
Gold rose $14.50 to $854 per ounce in London on Tuesday before it saw about 1% losses as low as $830.80 by late morning in New York.
Gold Prices then rallied back higher in the last couple hours of trade, but still ended with a loss of 0.17%.
Silver rose 38 cents per ounce to $11.15 at the New York opening, but then fell slightly to $10.65 by about noon. Silver then rallied back higher into the close and ended with a gain of 1.67% for the session.
Oil saw nice gains in early trade, but it then fell back off and ended lower again on more demand concerns.
The Gold Price in Euros closed at €613.50, little changed from Monday's finish, while platinum gained $36.50 to $1024, and copper gained over 8 cents to about $2.41 to add to yesterday’s 18 cent gain.
Gold Mining and silver equities rose about 5% by early afternoon, gaining alongside the broader indices. They then fell back off, to about unchanged with an hour left to go in trade, but the miners then rallied back higher into the close and ended with about 3% gains.
There were no major economic reports, but the US government announced plans to spend $250 billion to buy stock in private banks with hopes that it will inject confidence in the banks and get them lending again.
The US Dollar index traded mostly slightly lower, as market participants considered the implications of this latest step in the government's bailout plan.
Treasuries fell as interest rates rose in reaction to Monday's large stock rally, during which the bond pits were closed.
Rick Santelli on CNBC noted that the bailout isn't working yet, since bills issued by the Treasury are yielding 0.5% to 1.10% while bills issued by government-sponsored enterprises like Fannie Mae and Freddie Mac – the busted home-loan insurers – are yielding a substantially higher 1.95% to 2.70%. The spread between Treasury and GSE debt should be much lower if not non-existent.
Elsewhere on Wall Street the Dow, Nasdaq, and S&P opened higher to add to Monday's remarkable gains, but all three indices then fell back off for most of the rest of the day and ended lower on profit-taking and apprehension about what lies ahead.
"Iceland's collapse is no small event," writes Jim Sinclair of JSMineset. "It is not something meaningless that cannot be applied to a broken giant like the United States, whose debt to non-US entities are enormous problem from banks to government.
"[Tuesday] morning the stock market in Iceland, after a three day stop, opened up down 77%. The Krona is in the tank.
"The very few people in Iceland that survived their crisis are those that, against all advice from every corner, held Gold Bullion."
Wednesday at 13:30 EST brings the US Producer Price Index for Sept., expected to show a 0.4% fall from Aug. So-called "core" PPI – stripping out food and energy –expected at 0.2%.
The NY Empire State Index for October is expected to give a sharply negative reading, with Retail Sales for Sept. expected down 0.7% from a month previous.