Gold Seeker Closing Report: Gold and Silver Fall a Little Over 1% While Fed Holds Steady

-- Posted Wednesday, 28 January 2009 | Digg This Article Digg It!

| | Source: GoldSeek.com

	Close	Gain/Loss
Gold	$888.80	-$10.05
Silver	$11.995	-$0.135
XAU	120.52	-1.56%
HUI	288.55	-2.42%
GDM	900.42	-2.07%
JSE Gold	2408.50	-142.09
USD	84.64	+0.32
Euro	131.42	-0.25
Yen	110.70	-1.70
Oil	$42.16	+$0.58
10-Year	2.656%	+0.137
T-Bond	128.921875	-2.28125
Dow	8375.45	+2.46%
Nasdaq	1558.34	+3.55%
S&P	874.09	+3.36%

Gold rose $2.57 to $901.42 in Asia before it dropped to $882.80 by early trade in London and then climbed back near $900 by midmorning in New York, but it next fell back off in late morning trade and made a new low of $882.75 ahead of a $6.05 bounce form that low in afternoon trade that left it with a loss of 1.12%. Silver fell as much as $0.285 to $11.845 by midday in London before it rebounded in New York to see a $0.042 gain at $12.172 by about 11AM EST, but it then fell back off into the close and ended with a loss of 1.11%.

Gold closed Tuesday $9.90 lower to $898.85 after gaining $13.55 on Monday and silver remained unchanged at $12.13 on Tuesday after Monday’s $0.18 gain.

Euro gold fell to about €674, platinum close at $950, and copper rose slightly to about $1.48.

Gold and silver equities traded mostly slightly lower and ended with about 2% losses.

The Obama administration announced a Bad Bank plan that “will create banks to absorb the bad assets weighing down the financial system.” The world economic forum in Davos is providing a platform for world leaders to debate about what they should do to help the world economy.

The FOMC kept its target rate in a target range of 0% to 0.25% as they continue to see a weakened economy and credit conditions as extremely tight. The fed said they are prepared to buy longer term treasuries if it would improve the markets. Jeffrey Lacker dissented from the other 8 voting members with his preference of buying treasuries now instead of other assets. Regardless, the fed said rates will remain low “for some time.”

The House votes on Obama’s stimulus plan tonight and is expected to pass it on to the senate. Tomorrow at 8:30AM EST brings Durable Goods Orders for December expected at -2.0% and Initial Jobless Claims for 1/24 expected at 575,000. At 10AM is the New Home Sales report for December expected at 400,000.

Oil rose slightly despite more inventory builds on hopes for an increase in demand.

The U.S. dollar index rose and treasuries fell while the Dow, Nasdaq, and S&P rose on hopes that the “Bad Bank” plan and the fed’s measures will help the economy.

Among the big names making news in the market today were Wells Fargo, AT&T, Fannie Mae, WellPoint, and Abbott.

“Having soared last Friday gold briefly consolidated in Asia before moving up in London to touch $912. On the opening of New York the price was pulled back to $905 as the U.S.$ began to decline. The $ has been moving in a different direction to gold of late, so can we say the $:Gold link is breaking? It looks to be so! Gold was consolidating as the $ fell but rose previously as the $ rose. Gold is looking more like the place to be both in deflation [and uncertainty] and in inflation. Long-term investors have been buying well over 50 tonnes of gold in the last three weeks, confirming this. This amount of buying is certainly swamping central banks gold sales and is showing investors the way forward.”- Julian D.W. Phillips, www.goldforecaster.com

Gold was caught up in several cross currents today as safe haven buying subsided a bit based on the rally in the stock equities versus continuing fears over the well-being of the financial system and the generally weaker Dollar. Not only that, but the volatility in the crude oil pit kept gold quite volatile as well.

As in yesterday’s session, gold and the stock market went in opposite directions with “risk” coming back into play as could be seen from the move higher in the Euro-Yen cross. I am sure the Japanese monetary authorities are absolutely delighted to see their yen going lower for a change. Recalling that a few months ago gold was seen as a risky trade to be avoided at all costs during times of financial upheaval, now it is being seen as a superfluous trade because risk is back! Hey, if risk is in why not buy that risky yellow metal? Ah yes, the “efficient” markets. For now gold is going in the exact opposite direction of the Euro-Yen cross, a bellwether for the precious metal which had been a fairly reliable indicator of what to expect for the metal. This serves to show how yesterday’s wisdom becomes today’s folly when it comes to trading today’s convoluted markets.

Once again we have a repeat of yesterday in the currency arena with the Dollar moving lower as a sign that “safe haven” is out and risk is in so why rush into the perceived safety of the Dollar. That feeds into that new lock step relationship between gold and the Dollar in which both move lower together. If one does not need to run into the Dollar for safety, then why bother with gold is the new thinking du jour. That has led to shorter-term longs bailing out of gold which was stymied yesterday in its upward march by concerted bullion bank selling near the $920 level. Once the “Do Not Pass Go” sign was put out, the day traders ditched and ran which turned the very short term indicators bearish. Fund managers are you still insisting on trying to beat the bullion banks at the paper game by your losing strategy of buying higher and higher and then selling lower and lower? Then take some of your money and stand for delivery and remove the gold that allows the shorts to laugh at your naivety.

Incidentally, it did not help matters any that the mining shares, as indicated by the HUI and the XAU were knocked lower yesterday. That pretty much undercut short term sentiment towards gold. After all, it is hard to be wildly bullish on the metal when the shares are going down.

Technically gold has indeed stalled out at $920 and is now seeking to uncover some quality buying to generate an obvious support level. The first level looks to be once again that $880 level which has been quite a significant number both on the way up and on the way down. Below that lies the $870 level which also closely corresponds to the 50 week moving average on the continuous weekly chart. Support then looks to come in near the $845 level.

Resistance remains the $920 level set out by the bullion banks with stronger resistance near the $935 region.

The fairly steep drop in open interest in yesterday’s session reveals a goodly amount of long liquidation occurred during the rollover period in which longs bailed out of the February but did not move into the April in equal numbers. Open interest readings have been healthy and remain supportive of any move higher as they are still at relatively low levels.

In a best case scenario, gold will be able to maintain support above $870 and consolidate with a period of some sideways chopping action building a base from which to launch higher. I will feel okay about the metal as long as it holds above $845 and bounces into a chop from that level.

It will now take a weekly push above that $920 level to keep the weekly chart firmly in a bullish posture. A downside breach of $820 would give the bears a definite advantage.

Keep in mind that after watching the stock market drop into the toilet, equity bulls are just itching for any reason to buy as bottom pickers are anxious to get in hopes of nailing that ever elusive exact bottom. The S&P will have to get back above 950 to convince me that we are breaking out of a trading range and even at that, it will need to do so on strong volume. Right now I think we are seeing a good deal of short covering taking place in the broader equity markets as traders wonder when the reflation policies followed by the Fed will begin to take effect. Many are hoping in hope but in markets, hope reigns eternal especially among those who have been on the losing side for so long. People generally WANT TO BE BULLISH on the stock market so the least bit of good news or hope for good news will bring in buying both from new longs and from nervous shorts…” - Dan Norcini, More at JSMineset.com

"April Gold closed down 11.4 at 890. This was 2.2 up from the low and 9.5 off the high.

March Silver finished down 0.212 at 11.963, 0.012 off the high and 0.003 up from the low.

The gold market clearly disappointed the bull camp with its action on Wednesday. Apparently seeing investor appetite for higher risk vehicles like stocks undermined the gold market on Wednesday. As usual strong gains in the equity market seems to siphon off money from the gold market and with the Dollar moderately lower and oil prices higher it was clear that typically supportive outside market action was simply being lost on the trade. It is also possible that hope for a US stimulus program, hope for further easing from the US Fed and favorable dialogue from Davos all served to deflate the gold bulls. One could also suggest that seeing a series of minor technical failures on the charts also favored the bear camp in gold. Surprisingly the sharp slide in Treasuries late in the trading session failed to inspire the gold bulls and again that was probably the result of the rather impressive and ongoing strength in the equity market.

In the end, the March silver contract seemed to be locked within the pre-existing range for the week. However, the silver market once again tried to diverge with the gold market at times during the session Wednesday, especially when silver attempted a somewhat impressive bounce in the mid morning action. Some silver bulls might have been a little disappointed that silver prices were lifted by periodic strength in the industrial metals or by the rather definitive pulse up in equity prices.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from Friday’s data: SPDR added 13.77 tonnes to a new record high holding, the LSE added 2.56 tonnes, and the JSE added 0.73 tonnes.

Note: Change in Total Tonnes from Friday’s data: 0.61 tonnes were added to the trust.

Note: Change in Total Tonnes from Friday’s data: 309.88 tonnes were added to the trust.

AngloGold’s (AU) sold mine stake to Newmont (NEM), ITH’s (THM) updated mineral resource estimate, Lihir’s (LIHR) production report, and Gold Reserve’s (GRZ) shareholder letter were among the big stories in the gold and silver mining industry making headlines today.

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Bear Creek Mining: ant of incentive stock options - More
- January 28, 2009 | Item | E-mail

Portage Acquires Iron Ore Properties - More
- January 28, 2009 | Item | E-mail

Forsys Metals Corp Confirms Granting of Interim Order and Expected Date for Mailing of Information Circular - More
- January 28, 2009 | Item | E-mail

Explor Continues Kidd Township Exploration Program - More
- January 28, 2009 | Item | E-mail

Cantex announces progress on Yemen projects - More
- January 28, 2009 | Item | E-mail

Trio Gold Corp. Grants an Extension to Case Financial Inc. - More
- January 28, 2009 | Item | E-mail

Valencia Resource Update- Forsys Increases Deposit Size and Grade - More
- January 28, 2009 | Item | E-mail

Shoreham Resources Ltd.: REXMA Increases Planned Production Rates for Marudi Alluvial Mining - More
- January 28, 2009 | Item | E-mail

Bonaventure Enterprises Provides Update from the K9 Uranium Property - More
- January 28, 2009 | Item | E-mail

Golden Predator Initiates Exploration at Tuscarora Gold Project - More
- January 28, 2009 | Item | E-mail

Zaruma Resources Reports on Corporate Developments and Gold Leach Project - More
- January 28, 2009 | Item | E-mail

International Finance Corporation Discloses Intention to Finance Lydian - More
- January 28, 2009 | Item | E-mail

Tara Minerals Acquires Strategic Property With Multiple Mineral Systems - More
- January 28, 2009 | Item | E-mail

Argentex outlines new sulphide-rich mineralization at Plata Leon - More
- January 28, 2009 | Item | E-mail

Anooraq Advises of Ongoing Discussions Relating to the Empowerment Transaction with Anglo Platinum - More
- January 28, 2009 | Item | E-mail

Romarco Encounters 60.6 Meters of 6.9 G/T Au at Haile - More
- January 28, 2009 | Item | E-mail

General Metals Discusses Completed Independence Phase 1 Drilling and 2009 Ramp Up for Production - More
- January 28, 2009 | Item | E-mail

SEC and BCSC Complete Reviews of Silverado - More
- January 28, 2009 | Item | E-mail

Continental Nickel Expands M Zone and Intersects 3.55% Nickel and 0.87% Copper Over 13.7 Metres at the Nachingwea Project - More
- January 28, 2009 | Item | E-mail

White Mountain Updates Stage 1 Pilot Plant Progress - More
- January 28, 2009 | Item | E-mail

Gold Reserve Sends Letter to Shareholders - "Gold Reserve Inc. (NYSE Alternext: GRZ) (TSX: GRZ - News) today sent the following letter to shareholders urging shareholders not to tender their shares into Rusoro Mining Ltd.’s (TSX-V: RML - News) (“Rusoro”) unsolicited offer of December 15, 2008 (the “Offer”) to acquire all of the outstanding shares and equity units of Gold Reserve in consideration for three shares of Rusoro for each Gold Reserve share tendered under the Offer." More
- January 28, 2009 | Item | E-mail

Anglogold sells stake in Australian mine for $1bn - "Newmont Mining, the world’s second-biggest gold miner, is paying $1bn to buy out Anglogold Ashanti’s minority share in what is set to become Australia’s biggest gold mine.

The transaction will give Colorado-based Newmont 100 per cent control of Boddington Gold Mine in Western Australia, an asset it believes will be relatively cheap to mine." More
- January 28, 2009 | Item | E-mail

International Tower Hill Mines Livengood Gold Project, Alaska - "International Tower Hill Mines Ltd. ("ITH" or "the Company") - (CDNX:ITH.V - News)(THM - News)(Frankfurt:IW9.F - News) is pleased to announce the results of its independent 2008 year-end updated mineral resource estimate for the Livengood gold project, near Fairbanks, Alaska. The independent study incorporates all of the 2008 drilling (a total of 183 core and reverse circulation holes) and trenching (totalling over 41,063 metres)." More
- January 28, 2009 | Item | E-mail

LGL's (Lihir Gold) Fourth Quarter 2008 Production Report - "Lihir Gold Ltd (Toronto:LGG.TO - News)(ASX:LGL.AX - News)(Other OTC:LIHRF.PK - News) ("LGL") is pleased to announce the release of its Production Report for the three month period ended December 31, 2008. Documents relating to these results, including the Production Results, Management Review, and an overview presentation will be available on SEDAR shortly at (http://www.sedar.com) and on the Company's website: www.LGLgold.com. Also, a recording of the Company's discussion of these results will be available shortly on LGL's website." More
- January 28, 2009 | Item | E-mail

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