Gold News

Gold Ends Weds 1.5% Higher as Fed Warns on Inflation; $13bn in 10-Year Treasuries Snapped Up Regardless

From Chris Mullen at

Gold Prices fell just slightly by late trade in Asia on Wednesday before rising throughout the London session and climbing as high as $907.45 per ounce from the overnight low of $886.50.

The Gold Market then slipped back near $900 in afternoon US trade, but it still ended with a gain of 1.57% for the day.

Silver fell to $16.18 and rose to $16.63 before it also came back off a bit in the last couple of hours of trade, but it still ended with a gain of 1.23%.

The Gold Price in Euros rose back above €615, platinum gained $35 to $1811 to a new record high, palladium gained $1 to $417, and copper rose nearly 10 cents to about $3.30.

Gold and silver equities rose over 3% by late morning before they fell back off in afternoon trade along with the major indices. They still ended with over 1% gains.

US productivity growth for the fourth quarter of 2007 showed a sharp decline in Wednesday's data, but it beat Wall Street's even worse expectations, leaving the US Dollar index near unchanged as traders awaited Thursday's decision from the European Central Bank on Eurozone interest rates.

Oil fell back near $87 as inventory reports came in better than expected. Crude inventories built 7 million barrels, gasoline inventories built 3.6 million barrels, and distillates rose 100,000 barrels.

Treasury bonds fell on profit-taking, with yields sitting near four-year lows, but losses moderated after a $13 billion 10-year note auction drew decent demand at a yield of 3.62%.

The Dow, Nasdaq, and S&P rebounded from Tuesday’s significant losses in morning trade, but they then fell back off in afternoon trade and closed near their lows of the session with roughly 1% losses after Fed governor Plosser stated that the central bank's other mandate remains price stability – and it must not be ignored.

Inflation indicators need to be closely watched, he said, and this was interpreted by many analysts to mean that Wall Street should not assume the Fed will continue to cut interest rates. They remain data dependent and there is still plenty of data to come out between now and the Fed’s next meeting in March.

Thursday at 13:30 GMT brings Initial US Jobless Claims for last week, followed at 15:00 GMT by Pending Home Sales for December and then Consumer Credit – also for December – expected at $8.0 billion.

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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.

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