Gold News

Gold Leaps on Tues as Dollar Sinks, Oil Surges; Fed's Hands Tied

From Chris Mullen at

Gold remained near unchanged in Asia and London on Tuesday before exploding higher in late morning New York trade.

Crude oil prices rose to a new record high of $129.60 and gasoline reached a new record high average of $3.80.

Legendary oil investor T. Boone Pickens came out with his forecast of $150 a barrel by the end of the year; Opec's president said they won't raise output before their next meeting in September.

The US Dollar index fell markedly as continually poor US economic data kept the Federal Reserve's hands tied from raising interest rates anytime soon.

Inflationary pressures in Europe may influence the ECB, in contrast, to raise rates despite recent signs of weakness, plus pressure from the US to join the Fed in cutting rates to levels below what even official inflation numbers are running at.

Gold ended near its high of $923.40 per ounce, with a gain of 1.62%. The Gold Price in Euros rose to about €587, platinum lost $9 to $2134, and copper remained at about $3.79.

Silver also surged higher in the last four hours of trade and ended near its high of $17.67 with a gain of 3.83%.

Treasuries rose despite a sharp rise in the Producer Price Index – up 0.4% in April from March alone, even stripping out "volatile" fuel and food – while the Dow, Nasdaq, and S&P fell on poor earning reports and worries over the economy as oil rose to yet another new record high.

"As oil nears $130, the historical relative value of Gold to Oil is now again at extreme lows," notes Peter Spina of

"This measurement, among with others, places the true value of Gold much higher than we are seeing it presently trade at. With today's very weak US Dollar and with continual prospects of additional expansion of the global money supply, gold becomes even that more attractive at this present time.

"The short-term prospects are encouraging, and a return to the mid-$900s is quite possible over the coming weeks. Despite the appearance of weakness in this market, the short-term bullish factors could become drivers of the Gold Price higher.

"Sub-$900 pullbacks are going to look more and more attractive going forward. Capital seeking shelter from monetary debasement will continue to deviate to preservation assets such as Gold and silver."

Gold and silver equities steadily rose throughout most of Tuesday's trade and ended at their session highs with over 2.5% gains despite noticeable weakness in the major indices.

Wednesday at 19:00 GMT brings the minutes from the Federal Reserve's latest interest-rate meeting of April 30th.

Looking to Buy Gold today? For direct access to live Gold Market prices, click through to BullionVault now...

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.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals