Gold News

Gold & Silver Bounce as Wall Street Surge Fails, China's Shrinking Exports Threaten the Dollar

From Chris Mullen at GoldSeek.com...

Spot Gold traded slightly higher in Asia and London on Wednesday before it briefly fell to $892.90 by 10:00 EST in New York.

The Gold Price then soared back higher in the last three and a half hours of trade, ending near its high of $913.15 with a gain of 1.6% for the session.

Silver meantime dropped as low as $12.57 a little after 08:00 EST, but it also surged back higher in late New York trade and it ended near its high of $12.89 with a gain of 2.4%.

The Gold Price in Euros rose to €712, turning higher from one-month lows near €700, while platinum gained $14.50 to $1047.50, and copper fell nearly 6 cents to about $1.62.

Gold Mining and silver equities rose over 3% in the first hour of trade and over 6% by late morning, before they fell back off a bit in afternoon trade. Gold and silver stocks still ended with about 5% gains on the day.

The US Treasury reported that – with 7 months left in the current budget year, ending Sept. 30 – the current fiscal deficit already outweighs last year shortfall of $454.8 billion.

Thursday at 08:30 EST brings Initial Jobless Claims for last week, expected at 640,000, plus Retail Sales for February expected at -0.4%.

Excluding autos, sales are expected at -0.2%. Then at 10AM comes the Business Inventories report for January expected down 1.1%.

Crude oil fell back below $43 as China cut back on its imports and inventories grew rather than an expected decline. Crude inventories rose 700,000 barrels, gasoline inventories fell 3 million barrels, and distillates fell 2.1 million barrels.

The US Dollar index fell on worries that China's plunging exports mean it will no longer be able to finance the US current account deficit.

"The dramatic deterioration in China's trade balance suggests that caution remains recommended and a lasting reversal in the dollar trend is unlikely," said Commerzbank in a research note, quoted by Reuters.

"The concern is that maybe China will not be able to generate massive amounts of foreign exchange capital, which can then be recycled to US Treasury securities," agrees said Boris Schlossberg, head of forex research at GFT in New York.

"That is the big fear factor that hangs over the Dollar."

Treasuries meantime rose, however, while the Dow, Nasdaq, and S&P ended barely higher following Tuesday's near-historic gains.

Chris Mullen is chief content manager of the GoldSeek family of websites, a leading source of gold news, comment and mining-stock data for private and institutional investors.

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