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Gold Gains 5.4% for the Week as Bernanke Warns on Economy, Buffett Says Fannie & Freddie Are "Over"

From Chris Mullen at

rose about 0.5% to $837.90 in Asia on Friday before it dropped all the way to $820.85 by early trade in New York.

But Gold it then rallied back higher into the close and ended almost 1% off that low with a loss of just 0.76%, putting in a gain of 5.4% for the week ahead of the long Bank Holiday weekend in London – center of the world Gold Market.

Silver rose 21 cents to $13.95 in Asia before it dropped to see a 44 cent loss at $13.30 in early New York trade, but it also rallied back higher into the close and ended with a loss of just 1.6%.

The Gold Price in Euros fell to about €559, platinum lost $14.50 to $1438.50, and copper fell over 7 cents to about $3.47.

Gold and silver equities fell about 4% by mid-afternoon before they rallied back higher into the close, but they still ended with about 3% losses.

There were no major economic reports, but in a speech at the annual Jackson Hole summit of central bankers, Ben Bernanke called the inflation outlook "uncertain" and said that the financial storm "has not yet subsided.

"Its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment."

Warren Buffet, speaking to CNBC, said the "game is over" for Fannie Mae and Freddie Mac as independent companies. The government-sponsored mortgage lenders supporting $5.5 trillion in US home loans "don't have any net worth," he explained.

But the US Dollar index rose after Buffet also told CNBC that he had no bets against the greenback. A very weak UK economic growth report reiterated the view that central banks in and around Europe will likely cutting interest rates soon.

The premise of relative Dollar strength, however, is based on the assumption that the Fed may be more biased towards raising rates for their next move – and that supposition is certainly up for debate.

Treasuries fell meantime as the Dow, Nasdaq, and S&P rose nicely at the Wall Street open on rumors of a buy-out for Lehman Brothers.

Gains moderated a little by midday, but stocks then rose back to nearly equal or surpass their earlier highs after oil added to its losses heading into its close.

On the energy markets, crude Oil erased all of Thursday's $5.62 gain and more as Russia started pulling out of Georgia. Tropical Storm Fay finally turned north and decidedly away from operations in the Gulf of Mexico.

Reports showing an increase in Opec output – and another showing an expected decline in US travel this upcoming Labor Day holiday weekend – also turned the supply/demand valuation more bearish.

Next week's economic highlights include Existing US Home Sales on Monday – when the London Gold Market is closed – and then Consumer Confidence, New Home Sales, and Fed Interest-Rate minutes on Tuesday.

Durable Goods Orders follow on Wednesday, with GDP and Initial Jobless Claims on Thursday, plus Personal Income and Spending, Chicago PMI, and Michigan Sentiment on Friday.

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Chris Mullen is chief content manager of the GoldSeek family of websites, a leading source of gold news, comment and mining-stock data for private and institutional investors.

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