Gold News

Gold ends Tues at new 27-year Closing High as Oil Rises, Stocks & Bonds Fall

From Chris Mullen at GoldSeek.com...

After a mixed start on Tuesday, Gold Prices spiked to as high as $766.33 by late trade in Asia, but then fell back near unchanged around $757 in London and turned mixed again in New York to close with a gain of just 0.04%, albeit at a new 27-year closing high.

Silver rose to as high as $13.98 in Asia, but it then fell back off for most of trade in London and New York and ended with a loss of 1.53%.

Gold Priced in Euros rose over €535, platinum lost $11 to $1410, palladium lost $13 to $365, and copper fell nearly 5 cents to about $3.68.

Gold and silver equities fell over 2% in the first hour of US trade before they rebounded slightly by late morning. They then failed to recover from falling back in afternoon trade, ending with about 2% losses on average.

Alongside the Gold Market, in fact, only crude oil managed to rise strongly on Tuesday, hitting new record heights as high as $88.20 before settling at $87.61 on fresh concerns about Turkey pursuing Kurdish rebels into Iraq. Turkey’s prime minister announced late in the day that Turkey has no plans to enter Iraq anytime soon, but the Ankara parliament is debating the action today.

Traders will now also be watching for Thursday's US inventory reports.

The Dow, Nasdaq, and S&P fell on more credit worries, those record high oil prices, and worries about housing after fresh comments from both Ben Bernanke and Treasury Secretary Hank Paulson noted that recovering from the deepening housing slump will likely take quite some time.

All eyes are now squarely focused on the Fed’s upcoming Halloween meeting and what action will be taken there. Data from the Federal Reserve on Tuesday showed that only 7 of 12 regional Fed banks agreed to last month's 50-basis point cut in Dollar rates, contrasting with the Fed’s unanimous decision at their Sept. meeting.

The US Dollar index rebounded from near record lows and Treasuries fell despite poor economic data and also comments from European Central Bank president Jean-Claude Trichet reinforced the view that Europe will likely keep rates unchanged at their next meeting.

New data showed net foreign purchases of US assets turning sharply negative in August, recording an outflow of nearly $70 billion. When including short-term instruments, in fact, there was a total of $163 billion in net foreign selling in August as the global credit crunch – caused by failures in US mortgage debt – spurred a flight of capital out of US stocks.

Today at 12:30 GMT brings US consumer price inflation data for September, expected to show 0.2% increases in both "core" and the broader measure, month-on-month, that includes oil and food.

New Housing Starts for Sept. are expected to show 1,285,000, while Building Permits are expected at 1,300,000. At 18:00 comes the release of the Fed’s latest Beige Book analysis.

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Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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