Gold News

Gold Ends Weds 0.2% Higher as Central Banks Move Together to Address Credit Crunch

From Chris Mullen at GoldSeek...

Gold Prices rallied early Wednesday in Asia and London, rising as high as $817.00 at the start of New York trade coming back off slightly in the last few hours of trade and ending with a gain of 0.20% for the session.

Silver dropped to $14.47 and rose to $14.797 before it also fell back in the last few hours of trade and ended with a loss of 0.20%.

The Gold Price in Euros rose to about €553, platinum gained $11 to $1473, palladium gained $4 to $348, and copper fell roughly 6 cents to about $2.96.

Gold and silver equities saw about 3% gains in morning trade before they fell back off with the major indices in afternoon trade, but they still ended with about 2% gains.

In an unprecedented move, the Federal Reserve, European Central Bank and Bank of England – along with the Bank of Canada and Swiss National Bank – acted to ease the credit squeeze in financial markets, the biggest act of international economic cooperation since the 9/11 attacks 2of 001.

The Fed is making up to $24 billion available to the ECB and SNB to increase the supply of dollars in Europe. The banks are also increasing the number of short-term liquidity auctions, adding as $40 billion in the US alone this month.

The US Dollar index fell slightly overall despite large gains versus the Yen as higher yielding currencies rose on central banking plans to flood the system with cash.

Treasuries fell and the Dow rose over 270 points at the open and the Nasdaq and S&P followed suit on news of the Fed’s plan, before gains tapered off.

Oil rose over $4 as crude inventories fell 700,000 barrels, gasoline inventories built 1.6 million barrels, distillates fell 800,000 barrels, and refinery utilization fell 0.6% to 88.8%. Continued harsh weather and a refinery fire also kept supply concerns fresh while the fed’s cash injection eased demand worries.

On the data front, US import prices for Nov. jumped to show 2.7% inflation month-on-month, but excluding oil the number fell to 0.7%. The trade balance worsened unexpectedly in Oct. to $57.8 billion.

Thursday at 13:30 GMT brings Producer Price Inflation for last month, expected at 1.5%, plus Initial Jobless Claims for last week and Retail Sales for November expected at 0.6%. At 15:00 GMT are Business Inventories for October expected at 0.3%.

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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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