GS: Gold Seeker Closing Report: Gold Gains Nearly 2% and Silver Gains Over 11%
The Metals:
Gold rose $16.50 to $756.95 in Asia and fell to see a $3.20 loss at $737.35 in London before it climbed to a new session high of $774.40 by late morning in New York and then fell back off into the close a bit, but it still ended with a gain of 1.77%. Silver rose $0.675 to $9.46 in Asia and fell to $9.01 in London before it climbed to a new session high of $10.148 by late morning in New York and then fell back off into the close a bit, but it still ended with an impressive gain of 11.44%.
Euro gold fell to about €586 on euro strength, 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 close.
The fed noted that downside risks to growth remain despite the large rate cut and 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.
TEXT-Comparison of Oct 29 and Sept 16 FOMC statements Reuters
Treasury, FDIC Said to Develop Guarantee Program to Curb U.S. Foreclosures Bloomberg
U.S. Fed launches four new currency swap lines Reuters
Tomorrow at 8:30AM EST 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%.
The Markets:
Oil rose markedly despite a rather bearish inventory report as the U.S. dollar index plummeted on the expectation and then follow through of the fed’s decision to cut interest rates by 50 basis points. 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 even further versus the yen after the fed’s rate cut was finally announced as some doubt that the Bank of Japan will actually follow through on their possible rate cut first rumored yesterday.
Treasuries ultimately fell on worries over future inflation while the Dow, Nasdaq, and S&P waffled on either side of unchanged both before and after the fed rate cut that met expectations. Stocks then climbed higher in late trade and saw 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.
Among the big names making news in the market today were Apple, Qwest, VW and Porsche, Procter & Gamble, Kraft, Sony, Moody’s, Comcast, Newmont, and GM.
The Commentary:
“December Gold closed up 13.5 at 754. This was 4.5 up from the low and 18.2 off the high.
December Silver finished up 1.015 at 9.805, 0.275 off the high and 0.235 up from the low.
Gold managed to reject initial weakness early Wednesday morning and by mid session the gold market had forged an impressive recovery bounce. Clearly the sharp slide in the Dollar, rising energy prices and gains in a host of physical commodity markets provided a short covering environment. While gold initially sagged in the wake of the Fed's 50 basis point rate cut, seeing the rate cut should continue to temper the deflationary mantra dominating the headlines. It is also possible that slightly better than expected headline readings in the US Durable goods report provided a lift to gold prices on Wednesday.
The silver market mounted a fairly impressive recovery bounce which some players might have attributed to technical short covering. However, with the stock market at times Wednesday adding to the gains from the prior trading session, it would seem like some of the severe deflationary environment was lifting and that in turn helped a number of physical commodity markets like silver rally. It is also likely that strength in gold and copper gave the silver bulls additional confidence during the trade today. Even a slight correction in the stock market after the FOMC rate cut decision failed to severely dent the strength in silver prices.”- The Hightower Report, Futures Analysis and Forecasting
