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 House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Hit by Options Volatility as U.S. Dollar Bounces

Commodities / Gold & Silver 2009 May 26, 2009 - 07:31 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF PHYSICAL GOLD fell hard early in London on Tuesday, returning from the long holiday weekend to drop 1.7% as the US Dollar and Japanese Yen rose sharply on the currency markets.

Global stock markets fell while government bonds rose.


Crude oil slipped back below $60 per barrel despite North Korea further defying the United Nations Security Council and test-firing two missiles as a follow-up to yesterday's 20 kiloton underground nuclear test.

"It is the options expiry on the June COMEX Gold contract today," says today's commodities note from Standard Bank here in London.

"As a result there might be some volatility as participants attempt to achieve certain strikes" – the price at which the option to buy/sell gold in June closes and is thus settled.

"Looking at the dispersion of option strikes and open interest, it appears the market would battle it out for a move either above $950 or below $930."

The Gold held in trust to back New York's SPDR fund – now backing 98.23% of each share in issue as metal is taken to cover storage fees – swelled on Friday for the first time in two months, growing to over 1,118 tonnes.

Speculative investors grew their bullish position in Gold Futures and options to a near 3-month high in the week-to-last Tuesday, according to the latest data from US regulator the CFTC.

More than three times the "net long" position in Gold Futures hit in Nov. 2008, the difference between bullish and bearish bets made by hedge funds and other large speculators remained 25% below the record peak of Oct. '07 and Feb. '08.

"Some physical selling is back in the market" with London and New York re-opening after the 3-day weekend, said Dick Poon, local manager for German refining group Heraeus in Hong Kong, to Reuters earlier.

"This is not the first time [North Korea has tested missiles], so I don't think it's a problem."

But "If a nuclear test cannot produce safe haven buying," counters one London dealer, "surely the short term outlook [for gold] turns negative."

"There are still plenty of problems out there, and I think you are going to continue to see flight to safety be an important factor," reckons Bill O'Neill, co-partner at futures-trading consultants Logic Advisors.

"Inflation seems to be an inevitable development. I think demand for hard assets will continue to be strong, and Gold will slowly but surely benefit from that."

Last week US president Barack Obama said in an interview with C-Span's Mike Scully that "Well, we are out of money now. We are operating in deep deficits" after being asked about the $11 trillion national deficit.

America's unfunded liabilities for retirement and health-care meantime total more than $99 trillion, says analysis from the Dallas Federal Reserve – "a very deep hole" in the words of Dallas Fed president Richard Fisher.

"I don't know a single person on the [Fed policy team] who is rooting for inflation or who is tolerant of inflation," Fisher tells the Wall Street Journal in an interview.

But on a recent tour of China, Japan, Hong Kong, Singapore and South Korea however, "I was asked at every single meeting about our purchase of Treasurys [i.e. Quantitative Easing]. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States. That seems to be the issue people are most worried about."

"The charts suggest the Dollar is oversold, but people are starting to ask existential questions about the United States," says T.J. Marta, RBC strategist and founder of the eponymous Marta on the Markets in New Jersey, speaking to Reuters.

Today the US Dollar jumped 1.5¢ better to the British Pound, curbing the drop in Sterling Gold Prices at £598.40 per ounce – down less than £3 from Friday's close.

For Eurozone investors now Ready to Buy  Gold, the price was unchanged at €682 an ounce as the Euro briefly dropped beneath $1.39 – the 2009 high first recovered last Thursday.

"The fear is about how much the [US] government can do," says Marta. "It's underwriting the banking system, the insurance industry, the auto sector. At some point, people say, 'Oh my God, is the whole thing going to implode?'"

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