Gold Ends Thurs 1.7% Higher Even as Dollar Rises, Stocks Fall; GDP Data

From Chris Mullen at GoldSeek.com...

The Gold Price dropped as much as $14.80 to $874 an ounce by midday in London on Thursday, but it then stormed back for most of the rest of trade and ended near its high of $905.65 with a gain of 1.7%.

Crude oil fell on worries over weak demand while the US Dollar index rose as the Euro slipped, falling on the view that Europe is worse off than the US economically.

Treasury bonds also fell, despite their historic safe-haven status as traders fear the market will not be able to absorb the massive amount of supply due to come on the market to fund stimulus plans and other measures aimed at helping the economy.

"The technical picture of Gold is very favorable," noted Julian D.W. Phillips of  GoldForecaster.com, "and the rise we saw [Thursday] shows a vigorous consolidation.

"The long-term investment demand coming through the Gold ETFs is extraordinarily high and likely to rise still further as these funds prove their liquidity can accommodate bigger volumes.

"What's more, this demand is coming from institutional fund managers of all sides of the investment spectrum."

The Dow, Nasdaq, and S&P fell markedly meantime as economic data came in notably worse than already horrible expectations and reinforced worries over a severe economic downturn.

Some serious doubts were also raised over the potential success of the "bad bank" plan.

Silver fell $0.355 to $11.64 before it also rallied back higher in New York and ended near its high of $12.265 with a gain of 1.3%.

Both Gold and silver then continued to rally further in after-hours access trade.

The Gold Price in Euros rose to €697, platinum gained $15.50 to $965.50, and copper fell a few cents to $1.45.

Gold Mining and silver equities fell over 2% at the open and then rose to find roughly 5% gains by late afternoon before they fell back off into the close. They still ended with over 4% gains on the XAU and HUI.

Friday at 13:30 GMT brings US fourth-quarter GDP, expected at a dismal -5.4% annualized, with some analysts calling for as much as a 7% contraction.

The Chain Deflator is expected at 0.6%. Fourth quarter Employment Costs are expected to show a 0.7%.