Gold Sinks to 13-Month Low as Surging Dollar Destroys Everything But Treasury Bonds
From Chris Mullen at GoldSeek.com and Adrian Ash of BullionVault...
Gold and silver saw minor gains in early Asian trade Wednesday, but both then sold off for the rest of the day as world stock markets sank and the US Dollar surged on the currency market.
Gold ended New York trade at a new 13-month low of $732.20 per ounce, down 4.1% for the session and more than 17% lower for October so far.
Silver ended at $9.37 an ounce, losing 5.7% for the day. Both metals then continued to fall in after-hours access trade, before the Spot Price of gold bounced $10 off $721.40 – its lowest level since 19th Sept. 2007.
The Gold Price in Euros fell to €562, a new 1-month low almost one-fifth below Oct. 10th's all-time record high. Platinum lost $35 to $842, and copper fell another 15 cents to about $1.85.
Gold Mining and silver equities dropped throughout the session and ended with about 16% losses on average. Treasury bonds rose further still as the Dow, Nasdaq, and S&P fell over 5% on poor earnings reports and a bleak outlook that pretty much confirms a recession for the near future at least.
There were no major US economic reports today, but the Mortgage Bankers Association's seasonally adjusted index of mortgage applications – which includes both new purchase and refinancing loans - sank 16.6% for last week to its worst reading since Dec. 2000.
Thursday at 08:30 EST brings Initial Jobless Claims for 10/18, expected at 465,000.
Oil fell yet again, down to a new 16-month low on expectations of still lower demand heading forward, while the US Dollar index rose to its highest level in almost two years.
Both the Euro and British Pound plunged again on expectations of even worse economic growth in Europe than in the US, likely pushing the ECB and BoE towards cutting interest rates.
Many analysts also now expect the US Fed to cut Dollar interest rates at their meeting next Wednesday, but that isn't having much impact on the forex market aside from encouraging strength in the Japanese Yen – a currency that has already been paying less than 1% annual interest for more than a decade.