Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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