Gold Ends Week Above "Technical Support" at $760; Gold Mining Stocks Jump 10% as Dollar Sinks, Traders Bet on Fed Rate-Cut

From Chris Mullen at GoldSeek.com and Adrian Ash at BullionVault...

Gold rose about 2% in Asia and London on Friday before spiking lower to $745.90 an ounce.

It then rallied to new session highs in the last few hours of trade and ended at its high of the day with a gain of 2.66%.

For the week, Gold lost 4.7%, the same proportion as crude oil prices. The metal closed just above the “technical support” line – rising from late-summer 2005 – identified by many analysts including the team at Mitsui, the precious metals dealer, and now standing at $760.

Silver rose to $10.932 in London meantime before it also briefly spiked lower in New York and saw just a $0.04 gain at $10.52 a little after the Wall Street open. It then rallied back higher into the close and ended with a gain of 2.43%.

The Gold Price in Euros rose to about €567, even as the single currency spiked alongside the British Pound on bear closing. Platinum gained $67.50 to $1204.50, and copper gained over 7 cents to about $3.21.

Oil rose in early trade on worries over Hurricane Ike before it briefly dipped below $100 for the first time since March 4th in late trade, but it still ended with a slight gain as traders gauged the damage the storm will do over the weekend.

The US Dollar index fell markedly as traders closed Euro- and Sterling shorts, even starting to price in the possibility of a Fed rate cut as soon as this weekend if not at next Tuesday’s scheduled meeting.

Almost all analysts now expect the Lehman problem to be resolved one way or another over the weekend. Cutting the Fed funds rate from the current 2% – already 3.5% below official Consumer Price inflation – may come as part of that effort.

Treasury bonds fell sharply, meantime, pushing the 10-year yield ten basis points higher to 3.73% on better than expected Michigan Sentiment data. Retail sales in August – ex-autos – accelerated their rate of loss, however, while “core” Producer Prices (excluding oil and food) continued to rise, up 0.2% from July.

The Dow, Nasdaq, and S&P fell at Friday’s open on fresh financial worries and higher oil prices, but all three indices rose back near unchanged by the close – and ended the week 1.8%, 0.2% and 0.8% higher respectively.

Silver and Gold Mining equities – often seen as a leading indicator of strength in the Gold Price – surged throughout Friday’s session, ending with over 10% gains.

Next week’s US economic highlights include the NY Empire State Index, Capacity Utilization, and Industrial Production on Monday; the key Consumer Price inflation data, Net Foreign Purchases, and the Fed’s scheduled interest-rate decision on Tuesday; Building Permits and Housing Starts on Wednesday; and finally Initial Jobless Claims, Leading Economic Indicators, and the Philadelphia Fed survey on Thursday.