Gold Shines As Fed Ramps Up Money Printing

By Glenn Dyer | More Articles by Glenn Dyer

Oil, gold, and silver jumped on Monday in the wake of a new Fed move to support financial markets. That hit the value of the US dollar, pushing it lower and lifting the prices of some key commodities.

But the prices of copper and iron ore fell sharply sending a vital signal that the global economy is heading for a big crunch, led by the US as we will see when jobless figures soar.

Gold futures soared on Monday, jumping more than $US80 an ounce.

That’s a jump of 5.6% and was the biggest daily dollar climb for the most-active contact, based on records dating back to 1984, and the largest one-day percentage rise since March 2009, according to Marketwtach.com.

Weakness in the dollar, which dropped in the wake of the US Federal Reserve’s latest move to buy an unlimited amount of Treasuries and private securities to support the financial market, drove the surge.

Wall Street again sold off, despite the Fed’s move which saw US bond yields tumble with the 10-year yield back around 0.75%.

Comex April gold rose $US83, or 5.6%, to settle at $US1,567.60 an ounce.

Comex May silver also rose, jumping 87.6 cents, or 7.1%, to $US13.261 an ounce, after a fall last week of 14.6%.

But copper kept on tumbling on Monday on Comex.

May copper shed 3.3% to $2.1005 a pound. That was after a 12% last week and a strong signal that the world economy is heading for a nasty recession or worse.

And it was a similar story with iron ore prices which tumbled as talk of weakening demand for steel outside China hit confidence.

The price of 62% Fe iron ore fines delivered to northern China, fell 8% to $US81.07, according to the Metal Bulletin.

That’s a fall of 12% over Friday and Monday’s sessions.

Meanwhile oil prices ended Monday higher after another day of volatile trading.

The central bank said it would buy unlimited amounts of Treasuries and securities tied to home and business mortgages to support financial markets. It was a move that sent prices high, eventually.

May West Texas Intermediate oil rose 73 cents, or 3.2%, to settle $US23.36 a barrel in New York.

Brent settled down slightly at $US27 a barrel in Europe.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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