Gold News

Gold Ends the Week 6% Down, Silver Drops 9%, as Equities Tumble on "Horrible" US Data

From Chris Mullen at GoldSeek.com...

Gold and silver both traded slightly lower in Asia on Friday, climbing as high as $960.70 and $13.37 respectively in London but then falling back off in early US trade.

Dropping as low as $926.70 and $12.83 and seeing losses of $15.40 and $0.13 per ounce by noon in New York, both Spot Gold and silver then rallied higher into the close.

Gold ended Friday unchanged overall, but 5.8% down for the week. Silver ended the session more than 1% higher, but it slid almost 9.4% from the previous Friday's finish.

Oil fell about 1% on renewed worries over demand as US economic data came in even worse than horrible expectations.

GDP shrank for 6.2% annualized during the fourth-quarter of 2008. Cash prices rose 0.5% meantime, well ahead of the negative 0.1% reading analysts forecast.

The US Dollar index rose as traders bought its safe haven appeal. Treasuries eventually fell again on continued worries over the market's ability to absorb the massive supply of bonds due to be sold to the market in order to fund President Obama's new trillion-dollar deficits, announced this week at $1.7trn for 2009.

The S&P broke through its November 2008 intraday low and joined the Dow at new 12-year lows in early trade in reaction to the new Citigroup deal – under which Washington can take a 36% stake in the Western world's biggest bank for $25 billion in funds.

Stocks fell further to close markedly lower – down 4.5% for the week.

The Gold Price in Euros meantime recovered to €742.50 an ounce – down 4.2% for the week – while platinum gained $31 to $1075, and copper fell nearly four cents to about $1.53.

"This is not a bubble in gold," says Peter Spina, analyst at the widely-followed GoldForecaster.com. "The only bubble that is ongoing is the fantasy land that all is okay.

"Gold is undergoing a healthy pullback, backfilling after rising from $750 to $1,000 over the past couple months. The $900 area exhibits excellent support and a continued influx of investment capital will continue to support the market.

"It is my belief that gold is heading for $1,200 and higher in the coming months."

Gold Mining and silver equities climbed over 2% higher at Friday's open before they fell to see 2% losses by noon in New York. Precious metals producers then rallied back higher in afternoon trade to end near unchanged for the day but 10% down for the week.

Next week's economic data reports include US Personal Income and Spending, Core PCE, Construction Spending and the ISM Index on Monday; Pending Home Sales on Tuesday; the ADP Employment report for Feb., plus ISM Services and the Fed's Beige Book on Wednesday; Productivity, Unit Labor Costs, Initial Jobless Claims, and Factory Orders on Thursday; and finally February's jobs data and Consumer Credit on Friday.

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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