Gold News

Gold Slips as Crude Oil Pulls Back, Fed "Talks Tough" on Inflation Once More

From Chris Mullen at GoldSeek.com...

Gold Prices rose to $909 by late trade in Asia on Monday before falling throughout most of London and New York hours to drop as low as $890.60 per ounce.

Oil fell after last week's record gains, but it only retraced about $4 of the more than $16 gains seen on Thursday and Friday after geopolitical tensions remained relatively tame over the weekend.

The US Dollar index rose after Treasury secretary Henry Paulson refused to rule out currency intervention in an interview on CNBC. Pending Home Sales also buoyed the greenback after coming in better than expected, increasing 6% in April against -1% forecast.

The Gold Market then rallied back higher in the final minutes and ended with a loss of just 0.10%. It continued to slip, however, in after-hours access trade.

Silver rose to $17.63 and fell to $17.10 before it closed New York with a loss of 1.32%.

The Gold Price in Euros rose near €572, platinum lost $32 to $2042.50, and copper fell slightly to about $3.61.

Gold and silver equities rose about 1% by late morning, but they then fell off slightly in afternoon trade and ended mixed and near unchanged.

The Dow and S&P traded mostly higher on optimism over lower energy prices, but worries over the financials capped any significant gains while the Nasdaq remained modestly weaker for most of the day.

Treasury bonds fell as open-market interest rates fell, especially on the short end. The Fed's New York president, Timothy Geithner, hinted towards the need to raise interest rates to contain inflation.

He also defended the bailout of Bear Stearns and calling for "greater flexibility to respond to acute liquidity pressure in markets without undermining its capacity to manage the federal funds."

Ben Bernanke, Fed chairman, then spoke after the US close, again stressing that the Fed will "strongly resist" the current surge in inflation.

US interest rates, however, remain at half the current rate of consumer-price inflation. (Read more about The Fed's New Strong Dollar Policy here...)

Tuesday at 13:30 GMT brings the US Trade Balance for April, expected at a negative $60.0 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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