Gold Seeker Closing Report: Gold and Silver Fall Almost 2% and 5%

	Close	Gain/Loss
Gold	$1347.40	-$23.60
Silver	$27.47	-$1.35
XAU	202.26	-1.61%
HUI	209.93	-1.45%
GDM	1513.10	-1.33%
JSE Gold	2564.39	-27.65
USD	78.80	+0.22
Euro	134.80	+0.11
Yen	120.48	-1.40
Oil	$88.86	-$2.00
10-Year	3.459%	+0.122
T-Bond	119.46875	-1.53125
Dow	11822.80	-0.02%
Nasdaq	2704.29	-0.77%
S&P	1280.26	-0.13%

Worries over inflation and interest rate hikes around the world hit the commodity markets hard today. “Brazil took the lead with an aggressive interest rate hike of 50 basis points to 11.25% after inflation almost reached 6% in 2010.” Many speculate that China will follow as its “economy expanded more quickly than expected in the fourth quarter, while December inflation softened, providing Chinese policy makers with a confounding situation that could require further tightening to ease the rapid growth.”

Gold fell to as low as $1343.24 by about 10:30AM EST before it rebounded in the last few hours of trade, but it still ended with a loss of 1.72%. Silver fell to as low as $27.39 before it also rebounded, but it still ended with a loss of 4.68%.

Euro gold fell to about €1002, platinum lost $19.25 to $1812.75, and copper dropped almost 10 cents to about $4.27.

Gold and silver equities fell over 3% by about 11AM EST, but they then rallied back higher for most of the rest of the day and ended with only about 1.5% losses.

Report	For	Reading	Expected	Previous
Initial Claims	1/15	404K	425K	441K
Existing Home Sales	Dec	5.28M	4.80M	4.70M
Leading Indicators	Dec	1.0%	0.6%	1.1%
Philadelphia Fed	Jan	19.3	20.0	20.8

Oil remained markedly lower after the Energy Information Administration reported that crude inventories rose 2.6 million barrels, gasoline inventories rose 4.4 million barrels, and distillates rose 1.0 million barrels.

The U.S. dollar index rose on mostly better than expected economic data that sent treasuries lower. Today’s $13 billion 10-year TIPS auction drew a high yield of 1.170% with a bid to cover of 2.37.

The Dow, Nasdaq, and S&P fell on concerns that China’s “central bank will increase borrowing rates to curb spending and slow growth.”

Among the big names making news in the market today were UnitedHealth, Union Pacific, GM, PNC Financial, Wendy’s, Southwest Airlines, Orchard Brands, Perrigo, Knight Capital, and Morgan Stanley.

Weakness in gold and silver were blamed on several factors as trade moved into New York this morning.

Overnight Brazil hiked its core interest rate by 50 basis points and there was additional chatter of further interest rate hikes in China to combat surging inflation pressures on the heels of some data out of that quarter suggesting previous hikes in both interest rates and reserve ratio requirements are not having much effect on taming price rises. That led to a general reduction of the “risk trades” and selling in commodities as a whole. Witness the case of the two markets I like to track in the sector, copper and crude, which were both sharply lower, crude oil failing to hold support at $90 and copper getting spanked for more than 10 cents. Even corn, which has a strongly bullish set of fundamentals did not escape the selling barrage when it opened for trading in the pit this morning although it did finally absorb the algorithm selling before moving higher again. At least fundamentals are still ruling in a few of our markets. Ditto for wheat which is now trading above the $8.00 level as I prepare these comments. Food prices continue to rise – period.

There was also an unemployment number which came in lower than some were expecting leading some to talk up the prospects of the US economy which brought some strength into the US Dollar. The Dollar also was the recipient of a sharp selloff in the Yen and the commodity based currencies which moved lower as the risk trades were dumped. (Bonds were also sold down).

There was also the rather strange report out of the CME Group that the mini gold contract was to be delisted. This is the 33 ounce contract not the micro gold contract. This abrupt announcement, without any explanation, (there was a blurb on their website) had many traders wondering what was going on and why. Some sold first and waited for an explanation later. I am still going to try to see if I can find out what the reason behind that sudden announcement was.

All of the above combined with a rather big onslaught of selling in gold and especially in silver which took out a critical support level on its daily chart.

Gold dropped as low as $1342 on its chart, a level which it must now hold to prevent a deeper correction down towards the $1320 level. The daily chart pattern has taken on a decidedly negative aspect with today’s sharp move lower. Perhaps a bit of saving grace for the metal is that the funds have been liquidating longs for some time now and have greatly reduced long side exposure back to levels last seen when gold was trading closer to $920 or so. That will help some but if for some reason the price level were to break down through $1320, a very substantial long side selling rout would take place that would damage investor sentiment towards gold in the immediate term. We’ll have to see where and when this selling barrage finds a respite. Bears were attempting to force it down through $1340 throughout the session but after the initial drop down towards that level, were unable to do so. Volume was very heavy today suggesting a great deal of emotional based selling. It is going to take some time to therefore repair the damage to the bullish psyche. Even with today’s sell off in gold, it is only down about 6% off its recent peak. Considering the fact that it has moved up 24% since July of last year, that is really insignificant.

Euro gold dipped under the 1,000 Euro mark for the first time since November of last year at today’s PM Fix. It would need to hold above €950 to prevent a wave of deeper selling on that side of the globe as that would do some damage to the gold chart when viewed in terms of the Euro.

On the weekly chart, gold is forming what can be viewed as a potential rounded top formation with support evident near the $1320 level. That is why this level is important for the metal to hold to prevent a deeper setback towards $1285 – $1280. It will take a closing push past $1370 to now turn the tide in favor of the bulls with $1380 to uncover buy stops from fresh shorts.

Silver’s breach of $28, a critical chart support level, casts a negative pall over that market. It had been uncovering some decent buying support near the 50 day moving average but that simply evaporated in the general rout among the metals today. Tightness in the physical market is apparently no match for the paper market. Used to be that in the childhood game of rock, paper, scissors, that paper covered rock so I suppose the same applies with the Comex paper market. It now needs to hold $27 or it will drop to $26.40 or so with the potential for $25 in the cards should it fail to stabilize near that level.

The HUI gapped lower today and now looks like it might want to head down towards the 490 level. It is extremely oversold on the daily technical charts and looks to be approaching levels that should put a halt to the severe selling. The region near 480, the 50 week moving average, should stabilize the sector, as it has proved to be a good level since July 2009 at containing all downward thrusts in price. Bottom pickers will probably begin nibbling soon.

Bonds were absolutely crushed today falling nearly two full points again in yet again a repeat of the pattern that we have now been spectator to for the last month. They are unloaded whenever it appears that the global economy is entering a period of rising interest rates only to be artificially manipulated higher by the Fed’s QE purchases which then cause an almost immediate rebound from off the lows as bond traders anticipate the next entry by the Fed into the bond market. As said many times over the last month, the market is a joke with everyone on the planet being able to see the game being played by the Fed. Specs came in and sell them lower only to then have a certain crowd jump in and bid them right back up in front of the Fed with more specs then waiting to unload their freshly purchased bonds into the hands of the Fed and then repeat. Lather, rinse, repeat. I am going to watch and see if the bonds immediately move higher on the reopen of trading early this evening. That has been the pattern and will reveal that the crowd is once again expecting them to come in and put another floor under the market.

It will continue to work until it doesn’t. Heaven help us all if 118^20 gives way on big volume. Then again, with a total commitment of $600 billion in freshly created “money” to be thrown at the market, it is difficult to imagine that. For now we play the game with the rest of the crowd and do the bidding of our monetary masters. This is what particularly galls me whenever I read comments from public US officials who have the temerity to lecture the Chinese on the level of the yuan.

The Dollar was resuscitated right on schedule today as it is attempting to recapture important chart support near the 79 level on its daily price chart. Technicals are pointing lower however. What is amazing is that one can lay a chart of gold over the chart of the Dollar and the two markets have had nearly identical chart patterns since November of last year. I am not sure what to make of this just yet. One would expect a breach of support in the Dollar to garner buying interest in gold but that has not been the case for the last two months.”- Dan Norcini, More at JSMineset.com

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 5.464 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 117.91: +0.88 change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 10,575.32: 10.63 change from yesterday’s data.

SEMAFO’s (SMF.TO) possible dual listing, Timberline’s (TLR) drill and metallurgical results, IAMGOLD’s (IAG) exploration update, Freeport’s (FCX) fourth quarter results, Newmont’s (NEM) 2010 production and operating results, and Silver Quest’s (SQI.V) updated National Instrument ("NI") 43-101 resource estimate 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.

Largo Appoints Les Ford to Be Technical Director of Brazilian Operations - More
- January 20, 2011 | Item | ShareThis ShareThis

VMS Updates Exploration Plans for Its 100% Owned Properties, Flin Flon-Snow Lake Greenstone Belt, Manitoba - More
- January 20, 2011 | Item | ShareThis ShareThis

Wallbridge Mining Sells 500,000 shares of Duluth Metals to Raise $1.47 million - More
- January 20, 2011 | Item | ShareThis ShareThis

Spartan Gold Ltd. Enters Into MOU With RCG Holdings to Co-Develop Security Applications for the Mining Sector - More
- January 20, 2011 | Item | ShareThis ShareThis

Wallbridge Mining and JV Partners Plan a Busy 2011 - More
- January 20, 2011 | Item | ShareThis ShareThis

Platinex Reports Herrick Deposit Drilling at Shining Tree - More
- January 20, 2011 | Item | ShareThis ShareThis

Gold-Ore Reports Significant Gold Resource Increase at Bjorkdal Gold Mine - More
- January 20, 2011 | Item | ShareThis ShareThis

Matamec Announces a 42% Increase in TREO Indicated Resources at its Zeus Property - More
- January 20, 2011 | Item | ShareThis ShareThis

Kenai Resources Ltd.: Sao Chico Gold Project, Brazil, NI 43-101 Technical Report - More
- January 20, 2011 | Item | ShareThis ShareThis

Athabasca Uranium to Acquire Additional Basin Properties & Expand Exploration - More
- January 20, 2011 | Item | ShareThis ShareThis

Miranda Gold Options Five Properties in Colombia - More
- January 20, 2011 | Item | ShareThis ShareThis

Victory Nickel Announces Drill Program at Mel Nickel Property - More
- January 20, 2011 | Item | ShareThis ShareThis

Uragold Bay Resources Inc.: Beauce Placer Gold Property Update - More
- January 20, 2011 | Item | ShareThis ShareThis

Golden Hope Announces Exciting Results from its 2010 Drill Program at its Bellechasse-Timmins Gold Project - More
- January 20, 2011 | Item | ShareThis ShareThis

Nevado Resources Corporation: Appointment to Board of Directors - More
- January 20, 2011 | Item | ShareThis ShareThis

Jim Cowley to Join the Board of Directors of Arianne Resources - More
- January 20, 2011 | Item | ShareThis ShareThis

Alto Group Holdings Announces Application Completed to Increase Bogue River Gold Property - More
- January 20, 2011 | Item | ShareThis ShareThis

Adventure Gold Discovers a New Gold-Bearing Zone and Receives Core Samples from Previously Performed Drilling on the Eastern Part of the Granada Extension - More
- January 20, 2011 | Item | ShareThis ShareThis

Malbex Reports 76.5% Average Gold Recovery From Preliminary Metallurgical Tests at Del Carmen Norte - More
- January 20, 2011 | Item | ShareThis ShareThis

Ivernia Intersects New High-Grade Zinc-Lead-Silver Zone at the Prairie Downs Base Metal Project - More
- January 20, 2011 | Item | ShareThis ShareThis

Zenyatta Ventures Ltd. Contracts Drilling Company and Hires VP Exploration - More
- January 20, 2011 | Item | ShareThis ShareThis

Baffinland Reports the Final High Grade Assays From Its 2010 Exploration Drilling - More
- January 20, 2011 | Item | ShareThis ShareThis

Merrex Gold-Strategic Energy Research and Minerals Initiates Research Coverage - More
- January 20, 2011 | Item | ShareThis ShareThis

GoldQuest Appoints Bill Fisher as Chairman; Issues Stock Options - More
- January 20, 2011 | Item | ShareThis ShareThis

ICN Check Assay Results Confirm High-Grade Gold Encountered in Lode Star's Drilling on the Bonanza Goldfield Project - More
- January 20, 2011 | Item | ShareThis ShareThis

Macusani Yellowcake Announces More High Grade Intersections at Kihitian Uranium Property, Peru: 8.0 Metres at 0.53% U3O8 (10.6 Pounds Per Ton) - More
- January 20, 2011 | Item | ShareThis ShareThis

MDN and SOQUEM Confirm High Gold Grades on the MCGold Project - More
- January 20, 2011 | Item | ShareThis ShareThis

High River Gold Announces Appointment of Chief Financial Officer and Change to the Board of Directors - More
- January 20, 2011 | Item | ShareThis ShareThis

Paget Minerals Increases Investment in Colombian Exploration Company - More
- January 20, 2011 | Item | ShareThis ShareThis

Gold Standard Ventures Corp.: New Gold Discovery at Company's Railroad Project in Nevada - More
- January 20, 2011 | Item | ShareThis ShareThis

Iberian Minerals Publishes Preliminary 2010 Production Results and 2011 Guidance for Condestable and Aguas Tenidas Mines - More
- January 20, 2011 | Item | ShareThis ShareThis

True North Gems Engages EBA Engineering to Prepare Mine Plan - More
- January 20, 2011 | Item | ShareThis ShareThis

Alderon Confirms Iron at Mills Lake with 30% Iron Over 193 Meters - More
- January 20, 2011 | Item | ShareThis ShareThis

Sandspring Establishes Exploration & Development Office in Guyana - More
- January 20, 2011 | Item | ShareThis ShareThis

Channel Resources Extends Gold Zones and Makes New Discovery at Tanlouka Gold Project, Burkina Faso - More
- January 20, 2011 | Item | ShareThis ShareThis

Renforth Commences Diamond Drill Program at New Alger Project - More
- January 20, 2011 | Item | ShareThis ShareThis

Orvana Provides EVBC Development Update and Reports Drill Results From Carles Deposit, Northern Spain - More
- January 20, 2011 | Item | ShareThis ShareThis

White Mountain Signs Third LOI With Major Pigment Producer - More
- January 20, 2011 | Item | ShareThis ShareThis

Nevada Exploration Inc. Launches Updated Corporate Website and to Exhibit at Vancouver Resource Investment Conference - More
- January 20, 2011 | Item | ShareThis ShareThis

Condor Resources Inc.: La Libertad Drilling Intersects Copper Mineralization - More
- January 20, 2011 | Item | ShareThis ShareThis

Cadillac Ventures Inc.: Third San Platon Hole Averages 1.3 g/t Au and 0.61% Cu Over 19.05 Metres - More
- January 20, 2011 | Item | ShareThis ShareThis

Aura Silver Resumes Drilling on High Grade Silver Projects and Drills Deeper for Higher Gold Grades, Taviche Mexico - More
- January 20, 2011 | Item | ShareThis ShareThis

Gold Canyon Announces Appointment of Sustainable Development Consultant - More
- January 20, 2011 | Item | ShareThis ShareThis

Denison Plans Significant Winter Drilling Programs in the Athabasca Basin, Including Advanced Exploration at Wheeler River - More
- January 20, 2011 | Item | ShareThis ShareThis

Batero Gold Intersects 452 Metres Grading 0.60 g/t Gold and 0.12% Copper from Surface on Initial Step-Out Drilling - More
- January 20, 2011 | Item | ShareThis ShareThis

Balmoral Commences Drill Testing of High Grade Fenelon and Martiniere Gold Projects, Quebec - More
- January 20, 2011 | Item | ShareThis ShareThis

Vior Completes the First Phase of a Surface Geochemical Sampling Survey on the Vezza-Noyard Project, Matagami Area, Quebec - More
- January 20, 2011 | Item | ShareThis ShareThis

Crescent Resources Releases Re-Calculated Assays From Uncle Sam Gold Project in Alaska - More
- January 20, 2011 | Item | ShareThis ShareThis

Hathor Exploration Limited: Three Rig Winter Drill Program is Underway at Roughrider - More
- January 20, 2011 | Item | ShareThis ShareThis

Alix Announces Revised Resource Model & 43-101 Resource Estimate and Preliminary Plans for the 2011 Field Season on the Golden Zone Mine Property, Alaska - More
- January 20, 2011 | Item | ShareThis ShareThis

Ashburton Receives Additional High Gold Assays Up to 148 g/t for the Deep Creek Gold Project, Nevada - More
- January 20, 2011 | Item | ShareThis ShareThis

Centurion Minerals Closes $1.7 Million Non-Brokered Private Placement - More
- January 20, 2011 | Item | ShareThis ShareThis

Thundermin and Cornerstone Intersect High Grade Copper Mineralization Assaying 5.0% Copper Over 16.5 m in the Upper Portion of the Little Deer Copper Deposit - More
- January 20, 2011 | Item | ShareThis ShareThis

Geo Minerals Commences Drilling at Red Hills Porphyry Copper Project, Arizona - More
- January 20, 2011 | Item | ShareThis ShareThis

Serengeti Reports Open-Pit Copper-Gold Resource at Kwanika - More
- January 20, 2011 | Item | ShareThis ShareThis

Sama Resources Acquires 1,212 Square Kilometres of Highly Prospective Properties in the Republic of Guinea, West Africa - More
- January 20, 2011 | Item | ShareThis ShareThis

U3O8 Corp. Confirms That Uranium Mineralization Extends 900m Along the Aricheng West Corridor in the Kurupung Project, Guyana - More
- January 20, 2011 | Item | ShareThis ShareThis

Timmins Gold Corp.: 20,030 Ounces of Gold Sold During Third Quarter of Production - More
- January 20, 2011 | Item | ShareThis ShareThis

SEMAFO Explores Possible Dual Listing in Europe - "SEMAFO (TSX:SMF - News) today announced that it is exploring the possibility of a dual listing of its common shares on the NASDAQ OMX Stockholm exchange in Sweden." More
- January 20, 2011 | Item | ShareThis ShareThis

Timberline Continues to Obtain Favorable Drill and Metallurgical Results at Lookout Mountain - "Timberline Resources Corporation (TSX-V:TBR - News)(AMEX:TLR - News) ("Timberline" or the "Company") is pleased to report that the most recent results of the Company's drilling and metallurgical testing at Lookout Mountain continue to demonstrate significant mineralized intervals and excellent leach characteristics for the recovery of gold." More
- January 20, 2011 | Item | ShareThis ShareThis

Silver Quest Announces Updated NI 43-101 Resource Estimate for Capoose Project, BC - "The resource estimate at a gold equivalent ("AuEq") cut-off grade of 0.40 grams per tonne ("g/t") is 31.22 million tonnes grading 0.38 g/t gold and 26.5 g/t silver for 383,823 contained ounces of gold and 26,593,915 contained ounces of silver in an Indicated category and 37.23 million tonnes grading 0.37 g/t gold and 24.6 g/t silver for 443,206 contained ounces of gold and 29,517,933 contained ounces of silver in an Inferred category." More
- January 20, 2011 | Item | ShareThis ShareThis

IAMGOLD Announces Greenfields Exploration Update - "We have a very robust greenfields program with a plethora of good projects. Led by our SVP Exploration, Mike Donnelly, our exploration team has created significant growth potential for the Company. We hold, or control through third-party agreements, a majority interest in more than 20,000 square kilometres of mineral lands in our exploration portfolio in nine countries of West Africa and the Americas. These lands are located in proven districts or geologic terranes with demonstrated gold potential, and provide an important strategic exploration advantage in the face of increased competitive pressures as the bull market for gold enters its eleventh straight year." More
- January 20, 2011 | Item | ShareThis ShareThis

Freeport-McMoRan Copper & Gold Inc. Reports Fourth-Quarter and Year Ended December 31, 2010 Results - "Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX - News) reported fourth-quarter 2010 net income attributable to common stock of $1.5 billion, $3.25 per share, compared to net income of $971 million, $2.15 per share, for the fourth quarter of 2009. For the year 2010, FCX reported net income attributable to common stock of $4.3 billion, $9.14 per share, compared to $2.5 billion, $5.86 per share, in the year 2009." More
- January 20, 2011 | Item | ShareThis ShareThis

Newmont Announces Preliminary 2010 Production and Operating Results; Portfolio Continues to Deliver - "Newmont Mining Corporation (NYSE:NEM - News) ("Newmont" or the "Company") today announced attributable gold and copper production of approximately 5.4 million ounces and 327 million pounds, respectively, for 2010, at estimated consolidated costs applicable to sales of $485 per ounce and $0.80 per pound, respectively, on a co-product basis." More
- January 20, 2011 | Item | ShareThis ShareThis

- Would you like to receive the Free Daily Gold Seeker Report in your e-mail? Click here

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this report is not a registered financial advisor. Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.