Gold News

Gold soars & bond yields fall as stocks slump on US slowdown; oil also gains

Courtesy of Chris Mullen at

The Spot Gold Price rose to its highest this week since May 2006, back when it climbed to as high as $725 for the first time in 25 years. Wall Street's stock indices closed the week more than 1.5% lower.

On Friday, the Gold Market traded mixed in Asia and London and then spiked higher following the release of poor US jobs data in New York.

After seeing over $10 gains and climbing over $706 by 10:00 in New York, gold did moderate into the close, but it still ended with a gain of 0.81% or the day.

Silver climbed over $12.60 before it also cut some of its gains by early afternoon. It ended near its session high with a gain of 1.54%.

The Euro Price of Gold rose over €509, platinum gained $7 to $1,290, palladium lost $2 to $332, and copper fell nearly 5 cents to abut $3.27.

Gold and silver equities saw roughly 1% gains for most of Friday's trade despite noticeable weakness in the broader indices, but the miners were dragged down to about unchanged by the close as gold ended off its earlier highs and the Dow, Nasdaq, and S&P ended with nearly 2% losses for the session.

August’s US jobs data showed a drop in US employment for the first time in four years despite a BLS adjustment that added 120,000 payrolls. June and July’s payrolls were revised down by 81,000 jobs to add to the day’s economic disappointment. The Dow, Nasdaq, and S&P fell markedly on the dismal jobs report.

But as if that weren’t enough for the equity markets, former Federal Reserve chairman Alan Greenspan said the current market turmoil was "identical" in many ways to the turmoil of both 1987 and 1998.

A Fed rate cut now seems no longer a question of if, but when - and by how much. The word “recession” is uttered more than one can count on outlets like CNBC. It was only seldom used and followed by laughter just a month ago.

The US Dollar index plunged under 80 to a new 15-year low as the jobs data all but ensured at least a quarter-point interest rate cut by the Fed at their next meeting on September 18th, if not an earlier.

Treasuries soared higher and interest rates plunged to new lows across the board as a weakening economic outlook pushed bonds higher. The yield on the 2-year dropped under 4%, the yield on the 10-year fell under 4.4%, and the yield on the 30-year fell under 4.7%.

Perhaps most ominous is the fact that the impact of the credit crunch that first evidenced itself in the middle of August has yet to be calculated. Upcoming earnings data and reports like September’s payrolls may be even worse.

Next week’s US economic highlights include US Consumer Credit on Monday, the Trade Balance on Tuesday, Initial Jobless Claims and the Treasury Budget on Thursday, plus the Current Account, Export and Import Prices, Retail Sales, Capacity Utilization, Industrial Production, Business Inventories, and Michigan Sentiment on Friday.

Whatever comes from next week's report, it's signal to note that crude oil rose Friday as concerns over tight supplies and geopolitical worries trumped possibly waning demand despite the signs of a slowing US economy.

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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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