Gold Seeker Closing Report: Gold and Silver Fall Slightly Before Fed Cuts 0.50%, Gain Roughly 1% After

	Close	Gain/Loss
Gold	$921.20	-$3.60
Silver	$16.70	-$0.04
XAU	189.34	+1.06%
HUI	470.50	+1.01%
GDM	1415.55	+0.94%
JSE Gold	2497.67	+64.59
USD	75.10	-0.45
Euro	148.66	+0.90
Yen	93.35	-0.11
Oil	$92.33	+$0.69
10-Year	3.733%	+0.075
T-Bond	118.3125	-1.00
Dow	12442.83	-0.30%
Nasdaq	2349.00	-0.38%
S&P	1355.81	-0.48%

Gold rose to $926.45 by late trade in London before it fell to $915.67 by about 10AM EST in New York, but it then rallied back higher into the close and ended with a loss of just 0.39%. In after hours access trade following the fed’s rate cut, gold rose to a new record intraday high of $935.45 and is trading about 1% higher from today’s earlier close at the time of writing.

Silver dropped to $16.55 in Asia before it rose to $16.82 by late trade in London, but it then fell back off for most of trade in New York and ended with a loss of 0.24%. It next set a new 27 year intraday high of $16.87 in after hours access trade after the fed’s rate cut and is trading almost 1% higher from today’s earlier close at the time of writing.

Euro gold fell to about €622, platinum lost $21 to $1685, palladium lost $3 to $387, and copper fell nearly 7 cents to about $3.22 before the fed cut rates, but those moves have also reversed to the upside at the time of writing.

Gold and silver equities remained mixed and near unchanged before the fed and soon rose over 2% after the fed, but they then fell back off with the major indices in the last hour of trade and ended with only about 1% gains.

Report	For	Reading	Expected	Previous
ADP Employment	Jan	130K	-	37K
GDP	Q4	0.6%	1.2%	4.9%
Chain Deflator	Q4	2.6%	2.6%	1.0%
FOMC	1/30	3.0%	3.0%	3.5%

The fed cut interest rates 50 basis points as most expected and also hinted towards future interest rate cuts should the economy need it. There was one dissenter in Richard Fisher who wanted no change in the fed funds rate. The fed referred to the fact that financial markets are still under considerable distress and they want to act in a timely manner to combat a deepening housing market and a soft labor market that is experiencing tightened credit for businesses and households. They expect inflation to moderate and will monitor it closely. The fed also cut the discount rate by 0.50% to 3.5%.

Tomorrow at 8:30AM brings the Employment Cost Index for the 4^th quarter expected at 0.8%, Personal Income for December expected at 0.4%, Personal Spending expected at 0.1%, Core PCE Inflation expected at 0.2%, and Initial Jobless Claims for 1/26 expected at 320,000. At 9:45 is Chicago PMI for January expected at 52.0.

Crude inventories built 3.6 million barrels, gasoline inventories built 3.6 million barrels, and distillates fell 1.5 million barrels. Oil traded mixed but ultimately ended higher as traders expect the fed’s 50 basis point cut to help demand.

The U.S. dollar index fell slightly before the fed meeting and then plummeted much further after the fed’s announcement. It closed just 0.27 points away from a new record closing low.

Treasuries fell slightly before the fed and dropped even more after as investors sold the safe haven vehicles for other assets.

The Dow, Nasdaq, and S&P fell slightly before the fed meeting and gained over 1% after on optimism that continued rate cuts will help stimulate the economy, but they then fell back off into the close and ended with slight losses on concerns over bond insurers.

Among the big names making news in the market today were Merck, UBS, Merrill, Boeing, Kellogg, and Lazard.

“February Gold finished down 4.5 at 920.6, 2.6 off the high and 4.3 up from the low.

March Silver closed down 0.04 at 16.76. This was 0.08 up from the low and 0.075 off the high.

While gold prices started out the session with some weak action, it was clear that the Fed's aggressive 50 basis point rate cut move was beneficial to gold prices which once again managed to rise to fresh new highs. In fact, with the Fed cutting rates aggressively and the US Dollar also coming under heavy selling in the wake of the move, the bull camp seemed to be getting help from a number of angles. While sharp gains in the stock market might eventually reduce flight to quality buying interest in gold, seeing the US economy avoid a sharp slowdown is thought by many in the trade to leave the door open for inflationary buying of gold. In the end, seeing the Fed respond as was hoped by the markets and also seeing Washington push for a quick stimulus passage seems to have reduced the threat of recession.

After some initial weakness silver prices responded to the latest US Fed cuts with another new high for the move. With the Fed cutting both the Fed Funds and Discount rates and apparently leaving the door open for additional rate cuts if necessary, that gave a host of physical commodity markets like silver a distinct lift. However, the silver market did have to battle some moderate weakness in copper prices for most of the trading session, but with the US equity market serving to improve macro economic sentiment with an impressive rally the fear of slumping physical demand was at least temporarily pushed aside.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from yesterday’s data: 77.09 tonnes were added to the trust.

A free, new stock report by Peter Zihlmann on Mexican Silver Mines Ltd. (TSXV: MSM): Follow-Up #2, Barrick’s (ABX) tire supply agreement, Great Basin’s (GBN) CFO appointment, New Gold’s (NGD) new president and CEO, IAMGOLD’s (IAG) corporate update, Lihir’s (LIHR) 4^th quarter production report, Aquiline’s (AQI.TO) drill results, First Majestic’s (FR.TO) mine update and new resource, Metalline’s (MMG) operations update, Excellon’s (EXN.V) graduation to the TSX on Monday, Alexco’s (AXU) updated resource estimate, and Scorpio’s (SPM.TO) new Board member 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.

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