Speculation about a rate cut, prompted by a 0.4 percent drop in U.S. retail sales last month, helped gold jump to a record yesterday. 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 rate cut. 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 rate-cut mode. This can only be bullish for the metals." Otstott said he bought gold and silver today....
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