Gold News

Gold rallies fast after dipping to $726.55 ahead of Fed interest-rate minutes

From Chris Mullen at GoldSeek.com...

Gold Prices traded lower in Asia on Tuesday and fell as low as $726.55 in London ahead of the US open, but the Gold Market then rallied for the next 5 hours and traded as high as $740.60 – just shy of Monday's start – before drifting into the close and ending with a gain of 0.56%.

The Dow and S&P indices meantime rose to new record highs, and the Nasdaq also found nice gains after the release of minutes from the US Federal Reserve's latest policy meeting indicated to Wall Street they may continue to cut interest rates at future meetings.

The only major economic news of the day, the Fed's minutes – released six hours after the Gold Market's sharp bounce had begun – showed unanimous agreement in the decision to cut rates by 50 basis points at their last meeting.

Perhaps most significant in the minutes was the complete lack of concern for inflation shown by Fed members. They had emphasized inflationary risks just a few months earlier.

Crude oil also turned higher after a US government prediction for strong demand in response to a forecast for a colder winter ahead, while the US Dollar index fell after the Fed’s minutes made it seem more likely the US central bank will continue to cut interest rates.

Silver dropped to as low as $13.12 in London and then rose as high as $13.56 in New York before ending with a gain of 1.51%. Gold Priced in Euros rose above €523, platinum gained $14 to $1367, palladium gained $2 to $362, and copper fell to about $3.61.

Gold and silver mining equities steadily rose throughout US trade and ended with nearly 3% gains.

Treasury bonds erased early gains after the Fed’s minutes, despite the outlook for lower interest rates. Bond traders seemed more concerned about the Fed’s abandonment of their previously perceived fight against inflation.

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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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