Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

Gold Rises on Safe-Haven Demand

Commodities / Gold & Silver 2009 May 06, 2009 - 07:48 AM GMT

By: Adrian_Ash

Commodities

THE SPOT PRICE of Gold rose early Wednesday in Asia and London, recording a morning Gold Fix of $903.50 an ounce as emerging-world stock markets rose yet again, adding 41% from March's low.

Base metals and energy prices also pushed higher, and crude oil broke back above $54 per barrel as government bond prices fell.


That knocked 10-year US Treasury yields further above 3.0%. Ten-year UK gilt yields rose to 3.56% – sharply above mid-March's all-time record lows beneath 3.0%.

"Gold caught a lot of people out yesterday as what looked like a break out of the recent consolidation pattern turned into a sharp reversal as gold closed on the lows," noted London dealer Mitsui in its Wednesday morning comment.

"The market needs to close above $905 to give a positive signal. If not, the consolidation pattern remains firm."

As world equities rose early Wednesday – with Hong Kong shares gaining for the fifth session running to hit a 7-month high – "There's a general buying of commodities, including gold, that's offsetting the usual safe-haven buying trend," said Dan Smith at Standard Chartered in London to Bloomberg this morning.

"Funds are generally looking to increase their exposure to commodities."

"The relationship between the Gold Price and what we might term signs of economic optimism – such as rising share and commodity prices – has not always been consistent," agrees the latest Asian Metals Monthly from Virtual Metals, published for Fortis Bank, "and there have been many occasions where gold has been boosted by general exuberance."

Casting doubt on the "green shoots" rally in global markets, however – and noting that gold's mid-April falls were due to a "bout of recoveryitis" in risk assets – the team believe the current "see-sawing [in Gold] is likely to continue but with a negative trend unless there are clear signs of renewed economic woe."

Overnight in the US, Bank of America was rumored to need as much as $34 billion in extra capital following the Federal Reserve's "stress tests" of 19 top banks.

A Bank of America spokesman declined to comment, but together with Monday's leak that 10 leading banks will be required to raise additional cash, press coverage of the stress tests "negates the whole point" according to Jaidev Iyer, ex-risk manager at Citigroup and now a bank-risk analyst.

New data from real-estate website Zillow meantime claimed that one-in-five US mortgages is now in negative equity, with the outstanding debt greater than the potential re-sale value at today's prices.

Average US Home Prices fell 14.2% in the last 12 months, Zillow says in its latest Real Estate Market Report, covering 161 urban regions. The loss to home-owner wealth since New Year's Day is put at more than $700 billion.

Across the Pacific, the People's Bank of China forecast a return to strong economic growth in 2010, but warned that "As more and more economies start to implement extraordinary monetary policies like Quantitative Easing, risks of major currency depreciation may grow."

Thursday's interest-rate decision from the European Central Bank (ECB) – expected to see a new record cut to just 1.0% – has been widely trailed by ECB policy-makers to include "non conventional" measures, taken to mean creating money to buy long-dated government bonds and thus inject cash into the 16-nation economy.

"[But] if central banks cannot mop up the huge liquidity when economic recovery comes through," warns the People's Bank of China today, "asset bubbles and inflation may once again be triggered."

Currently hoarding base metals such as copper at multi-year lows, the People's Bank grew China's Gold Reserves by 75% in the last five years, taking it to No.5 in the league table of gold-owning central banks.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules