Speculation about a rate cut, prompted by a 0.4 percent drop
in U.S. retail sales last month, helped gold jump to a
The Fed is now expected to cut borrowing costs at its
meeting on Jan. 30.
The gold price reached $916.10 yesterday, the highest ever
for a most-active contract.
The markets were expecting an emergency rate cut yesterday.
The reason for the reversal is that we didn't get that
The dollar rose as much as 1.4 percent against the euro
on speculation the European Central Bank will join
the Fed in cutting interest rates this year.
ECB council member Yves Mersch, who is also governor of
Luxembourg's central bank, cited "downside risks" to
the region's economic growth.
"People are selling gold, because the dollar is strong
as a result of the ECB saying they are not averse to
cutting rates," said Walter Otstott, a senior broker
at Dallas Commodity Co. in Dallas.
"If they bothered to think about it, they would realize
that we have the Fed, ECB and Bank of England in the
This can only be bullish for the metals."
Otstott said he bought gold and silver today....
Gold ... Yearly Chart
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