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Gold Adds 0.9% as Dollar Falls, Stocks Jump on Fed Decision; US Recession Worst in Half-Century

From Chris Mullen at

Gold remained near unchanged in Asia on Wednesday, traded slightly higher in London, and jumped over 1% to as high as $901.75 at the New York open.

The Gold Price then fell back to about $896 midmorning, but it rose back near its earlier high in late trade and ended with a gain of 0.9%.

Silver followed a similar pattern and closed near its session high of $12.783 with a gain of 2.3%.

The Federal Reserve kept their key Fed funds interest rate in a target range of 0.00% to 0.25% as expected, and reiterated their plan of buying various kinds of securities.

The US central bank said that the pace of economic decline appears to be slowing, despite Q1 GDP data showing a much worse contraction than expected, and there was no real substantive change from their last statement.

The US Dollar index fell markedly and Treasury bonds dropped a fair amount while the Dow, Nasdaq, and S&P rose over 2% on rising-risk tolerance.

Despite showing the worst US recession in half-a-century, today's GDP report also revealed encouraging signs of rising personal consumption and falling business inventories.

The Gold Price in Euros fell to about €675 on Euro strength, platinum gained $7 to $1094.50, and copper gained over 9 cents to about $2.01.

Gold Mining and silver equities rose over 3% heading into the fed announcement at 2:15PM EST before they fell back off slightly in the last couple of hours of trade, but they still ended with about 2.5% gains.

Oil meantime rose near $51 despite a 4.1 million barrel build in US crude inventories as gasoline inventories surprisingly fell by 4.7 million barrels and worries over swine flu eased a little during US trade.

After the close, the World Health Organization (WHO) then raised its alert level to 5 out of a possible six, putting it one step from "pandemic".

Thursday at 08:30 EST brings Initial US Jobless Claims for last week, expected at 645,000, then Personal Income for March expected down 0.2%, Personal Spending expected at -0.1%, and the first quarter Employment Cost Index expected at 0.5%.

At 09:45 EST comes Chicago PMI for April, expected at 34.0.

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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