Gold News

Gold Drops from Near All-Time Record as Stocks Plunge; Bond Yields Fall to 4-Year Low

From Chris Mullen at GoldSeek.com...

Gold Prices traded decently higher in Asia and London on Tuesday, and then rallied after an early fall in New York to come within 20 cents of Monday's new all-time record high above $914 per ounce.

The Gold Market then fell to find a slight loss near $900 by the close, and the Gold Price then continued to fall in afterhours trade.

Silver rose to $16.52 in Asia before it dropped to as low as $15.927 by early afternoon in New York, but it also rallied back higher for most of the rest of trade and ended with a loss of just 0.55%.

The Gold Price in Euros fell to about €606, platinum lost $14 to $1576 to fall from a record high, palladium lost $2 to $378, and copper fell over 10 cents to about $3.24.

Gold and silver equities fell about 4% by mid-afternoon before they rebounded slightly into the close, but they still ended with over 3% losses.

On the economic front, US retail sales for Dec. showed a 0.4% loss, while the Producer Price Index slipped only marginally from Nov.'s 34-year record pace of input inflation.

Wednesday at 08:30 EST brings the US Consumer Price Index and Core CPI for Dec., both expected at 0.2%. At 09:00 is the Net Foreign Purchases of US securities report for Nov., and at 14:00 comes the release of the Fed’s Beige Book analysis.

In the broader markets on Tuesday, crude oil resumed its fall on worries about a slowing economy and its impact on falling demand. Saudi oil minister Al-Naimi also stated that the world's "swing" producer will increase production if “the market justifies it”, while traders prepared for US inventory reports today which are expected to show the first build in stockpiles in nine weeks.

The US Dollar index fell in early trade on recession fears, but it ended with a slight gain after the Fed did not shock the market – as rumors had claimed – along with the announcement of a third extra-ordinary auction of $30 billion in short-term loans to the banking sector to combat the credit crisis.

Treasury bonds rose noticeably as the Dow, Nasdaq, and S&P fell markedly on poor results from Citigroup and on disappointing Retail Sales. The yield on the 10-year fells to its lowest since early 2004 and the major indices fell to their lowest since last spring.

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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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