Gold Rises, Stocks Stumble, as Fed Cuts US Interest Rates Back to 1%
From Chris Mullen at GoldSeek.com...
Gold Prices rose $16.50 to $756.95 in Asia on Wednesday, before falling to see a $3.20 loss for the day in London.
Spot Gold then climbed back to a new session high of $774.40 by late morning in New York, before drifting to end with a gain of 1.77% from Tuesday as the Federal Reserve took US interest rates back to their six-decade low of 1% with a widely expected half-point cut.
In its accompanying statement, the Fed noted that downside risks to growth remain despite the large rate cut. That indicates perhaps further rate cuts or at least remaining at 1% for some time ahead.
Fed funds futures are already anticipating another 0.25% cut at the Fed's next meeting in December.
As the US Dollar index plummeted on Wednesday, oil prices rose markedly despite a rather bearish inventory report. The European Central Bank, the Bank of England, and perhaps even the Bank of Japan are also expected to cut interest rates as well in the coming weeks, but the Dollar fell further versus the Yen as many analysts doubt the Bank of Japan can actually follow through.
Treasury bonds ultimately fell on worries over future inflation while the Dow, Nasdaq, and S&P held either side of unchanged both before and after the Fed rate cut.
Stocks finally climbed higher in late trade, seeing about 2% gains at one point, but a late profit warning from GE brought the Dow and S&P back lower by the close while the Nasdaq escaped with a modest gain.
Silver rose $0.67 to $9.46 in Asia and fell to $9.01 in London before it climbed to a new session high of $10.14 late morning in New York. The metal then fell back off into the close, but it still ended with an impressive gain of 11.44%.
The Gold Price in Euros fell to €586 on sharp Euro strength vs. the Dollar – sparked by the Federal Reserve's rate cut – while platinum gained $14 to $807, and copper gained 23 cents to about $2.07.
Gold and silver equities rose over 12% by early afternoon and remained near their highs into the New York close.
On the data front, US Durable Goods orders for Sept. surprised with 0.8% growth vs. the 1.0% loss forecast.
Thursday at 12:30 GMT brings Initial Jobless Claims for 10/25 expected at 473,000, third quarter GDP expected at -0.5%, and the Chain Deflator expected at 4.0%.