Gold News

Gold Jumps to New Record on $100 Oil, Strong US Inflation, and Fed's Promise of More Rate Cuts

From Chris Mullen at GoldSeek.com...

Gold Prices fell early Wednesday as low as $913.40 by the New York opening, but the Gold Market then rallied fiercely higher over the next four hours to make a new intra-day and close with a gain of 0.85%.

Oil fell in early trade on profit taking after yesterday’s record run, but it came back to find a decent gain to close above $100 per barrel as supply concerns in Nigeria and Venezuela remained and traders also prepared for Thursday's US inventory reports.

The March contract rose to as high as $101.32 before it closed out at a new record high of $100.74. Thursday marks the use of the April contract as the most forward contract. It is currently trading about $1 below the March contract.

Silver fell to $17.173 before it rose as high as $17.75 and closed with a gain of 1.26% at a new 27-year high.

Both silver and Gold Prices then continued to gain in after-hours access trade, setting new multi-year and record highs respectively.
US consumer price inflation accelerated to 0.4% month-on-month in Jan. according to new data, while Housing Starts were lower than expected. Minutes from the US Fed’s meeting on Jan. 30th showed they feel downside risks remain even after their 50 basis point cut that day, but they also discussed a rapid reversal of the rate cuts should economic indicators turn around into more positive territory.

They defended the 75 basis rate cut of their emergency Jan. 21st meeting as necessary to align the real policy rate with the weakening economy.

Also announced was a previously undisclosed conference call on Jan. 9th that resulted in no public action.

The US Dollar index rose and Treasuries fell in early trade as the CPI came in higher than expected, but those gains and losses pared in later trade on the Fed minutes.

The Dow, Nasdaq, and S&P fell in morning trade on inflation worries, but they also reversed course midday and ended with decent gains on expectations the Fed will continue to cut interest rates despite higher than expected inflation.

The Gold Price in Euros also rose to new highs above €642 while platinum fell $20 to $2120, and copper fell a couple of cents to about $3.71.

Gold and silver equities steadily rose for most of trade and ended with about 2% gains. The three major mining indices (XAU, HUI, GDM) sit roughly 3-5% from making new record highs of their own. Previous record high closes were set on Jan. 14th.

Thursday at 08:30 EST brings Initial Jobless Claims for 2/16 expected at 345,000. At 10:00 is the Leading Economic Indicators report for January expected at -0.1% and the Philadelphia Fed survey expected at -10.0.

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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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