Gold News

Gold Jumps, Stocks Fall as Fed's "Zero Rate" Knifes the Dollar

From Chris Mullen at

Spot Gold and silver held only part of Tuesday's late post-Fed gains in Asia and London on Wednesday, before they rose markedly at the New York opening to hit new 9-week highs of $880.85 and $11.57 respectively.

Gold Bullion then fell back off a bit in the last few hours of trade, but still ended with a gain of 6.9% for the session. Silver added 3.2%.

The Gold Price in Euros fell, however, on fresh Euro strength that took it to $1.44 on the currency market and held gold down to €606.

Platinum gained $13 to $859. Copper fell slightly to $1.35.

Gold and silver equities rose roughly 4% by late morning, but they then fell back off into the close, together with the major indices, and ended about 1% lower.

Crude oil saw slight gains in early trade as Opec announced a 4.2 million barrel cut to output from September's levels, but that includes 2 million barrels already announced.

While the effective cut of 2.2 million barrels was still slightly more than the 2 million barrels expected, doubts exist over whether or not Opec will actually be able to enforce the cuts on its members, and oil ended the day back down near $40 at a new four and a half year low.

The US Dollar index fell yet again and Treasuries rose even further in continued reaction to the Federal Reserve's decision to cut rates to zero and print its way out of deflation.

The Dow, Nasdaq, and S&P fell on fears over why the Fed needed to take such drastic action.

There were no major economic reports Wednesday, but the Mortgage Bankers Association (MBA) said US mortgage applications climbed last week as 30-year mortgage rates fell near the lowest price on record.

Also announced was the third quarter current account deficit, costing $174.1 billion and worth a huge 4.8% of GDP. That amount was smaller than expected, however, and also less than the second quarter.

For the last year, the US trade deficit now totals $731.2 billion, meaning that the United States had to borrow $2bn per day to settle its bills with them.

Thursday at 13:30 GMT brings the US Initial Jobless Claims data for last week, expected at 558,000, and then at 15:00 comes the Leading Economic Indicators report for November (expected at -0.5%) and the Philadelphia Fed survey (expected at -40.0).

Chris Mullen is chief content manager of the GoldSeek family of websites, a leading source of gold news, comment and mining-stock data for private and institutional investors.

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