Gold Seeker Closing Report – Bill Gross Predicts Possible FOMC Rate Cut

There were no major economic reports today and there are no major economic reports due out tomorrow. With little to act on, most aspects of the markets ended near unchanged today as investors wait for events coming up at the end of the week. Greenspan and Snow will be testifying this Thursday about trade relations with

China

, so their comments may have some impact on the markets in addition to the economic reports released on Thursday and Friday.

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The gold price is an amalgam of diverse and changing influences, from Currencies to Jewellery, from Investors to Speculators. From Asia, to India, to Australia, to Canada, to South Africa, to the U.S.A. and to Asia, the gold price is of interest to all. It cannot be seen in isolation as a metal, but must be understood as a Global Thermometer measuring monetary, political, economic, stability as well as the raw demand / supply features of the metal itself. These factors do not merely add up to the price, but interact in sometimes strange ways, to produce the gold price. For example, rising prices often lead consequently to rising demand, as the appetite for the metal grows. Its price may rise in one currency and fall in another, at the same time. Overall, it reacts sensitively to the overall level of global stability, which, in turn, gives us the gold price.

It is our task in this letter to track these different features, giving you both the Technical Analysis and the fundamental features impacting on the gold price each week along with a T.A. focus on metal equities. It is our goal to help you to understand and profit from this market, wherever you are on this globe, in a professional manner.

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Oil traded mostly modestly lower this morning before finding small gains in early afternoon trade, but it then fell back off in late afternoon trade to end the day with a loss of $0.47 to $58.90 ahead of tomorrow’s inventory report. Most are looking for a decline in crude inventories, but a build in gasoline and distillate inventories. The demand figures released in the report will also be closely watched tomorrow.

Bill Gross of Pimco, a large and respected bond trader, said today that the fed may CUT rates by early next year, but his comments had little if any impact in the bond pits. The 10-Year Treasury note yield started off the day modestly lower and continued to move lower from there, ending the day with a loss of 0.054 points to 4.049% as the June 2005 US Treasury bond gained 23/32 to 117 7/32. A Swedish interest rate cut that helped European bonds gain was also seen as a reason for the strength in US bonds today.

The Dow, Nasdaq, and S&P traded mixed and near unchanged throughout the day and ended mixed amongst a variety of company news. The Dow lost 0.09% to 10599.67, the Nasdaq gained 0.14% to 2091.07, and the S&P lost 0.2% to 1213.61.

Among the big names making news in the market today were Winn-Dixie, AMC and Loews Cineplex, Krispy Kreme, CNOOC and Unocal, Haier and Maytag, Lennar, Kroger, BnB Nor, and Spitzer.

A rate cut by the Swedes and a possible ECB rate cut had currency traders talking ahead of an expected rate increase by the

next week. The euro initially fell near new 9 months lows following the Swedish rate cut, but rebounded back to end the day with gains as the dollar turned gains into losses.

“

U.S.

lawmakers unveiled legislation on Tuesday giving

China

90 days to revalue its currency or face an across-the-board tariff on its exports to the

United States

, which totaled $197 billion last year. U.S. Treasury Secretary John Snow quickly denounced the bill and others like it that threaten

China

with sanctions if it does not move to a more flexible exchange rate.” Those are harsh words coming from Congress, but the bill has little chance of getting anywhere.

The U.S. dollar index lost 0.35 points to 88.17. The euro index gained 0.28 points to 121.75. The yen gained 1.02 points to 92.37.

Gold fell about $2 in Asia and added another $2 of losses in London to fall under $434 at one point before rallying back throughout late London and New York trade to end today’s session near its highs with a gain of $0.50 to $438.40. Silver also traded lower in Asian and London trade before rallying back in late New York trade to end near its highs unchanged at $7.27. Fund selling and profit taking overnight drove both metals to relatively cheap levels, and traders took advantage in later trade today as the dollar turned gains into losses.

Gold and silver equities saw minor losses this morning, but rallied along with the metals to find gains by mid-afternoon, ending the day with modest gains.

Index	Close	Gain/Loss
XAU	91.78	+0.43%
HUI	198.95	+1.06%
GDM	644.83	+0.50%

“The gold market eventually mounted an impressive bounce off the aggressive lows that were forged Tuesday morning prior to the

opening. The gold market was helped to the recovery by a setback in the Dollar and more importantly by fund buying interest in a number of metals markets. In other words, the bear camp couldn't keep prices down and with the action in silver it is likely that fund players were major players in the mid day reversal. In retrospect it seemed that fund buying even surfaced in copper, which makes us think that the overall bullish biased has returned to the metals.” - The Hightower Report, Futures Analysis and Forecasting

Anglogold Ashanti’s continued exploration in volatile eastern Congo, Kinross Gold’s $10 million financing with Crow Resources, Pacific Rim’s accepted $5.4 million offer for their Andacollo assets, NovaGold’s C$50 million bought deal financing, Miramar’s filing of the Draft EIS for the proposed high grade Doris North Mine, Nevsun’s assay results from the Bisha Gold/VMS deposit, and IMA’s silver mineralization at its Navidad discovery were among the big stories in the gold and silver mining industry making headlines today.

1. MK Resources	MKRR.OB +7.14% $1.20
2. Eldorado Gold	EGO +5.18% $2.64
3. ENDEAVOUR	EDR.V +3.85% $1.89

1. Novagold	NG -5.57% $7.97
2. Sterling Mining	SRLM.PK -4.23% $3.40
3. Northern Dynasty	NAK -4.13% $3.71

Do you have questions, comments, or suggestions about this report? Email Chris Mullen at cm@goldseek.com.

The Gold Seeker Closing Report is a free edition providing a daily wrap-up of gold & gold-related news. For more in-depth analysis of the gold markets, subscribe to The Gold Forecaster.

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