Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Jumps Towards $1000 as US Dollar Sinks As Treasury Bonds Tumble

Commodities / Gold & Silver 2009 Jun 01, 2009 - 11:30 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF PHYSICAL GOLD jumped in US Dollars for the third session running early Monday in London, recording the best AM Gold Fix since Feb. 24th at $987 per ounce.

Stock markets also leapt worldwide – up more than 3.0% in Frankfurt – while commodities added to last month's 34-year record gains.


The US Dollar fell against all other currencies. Long-dated government bonds also fell, pushing interest rates higher.

"We believe in a Strong Dollar," said US Treasury secretary Tim Geithner to students at Peking University this weekend, "and we're going to make sure that we repair and reform the financial system so that we sustain confidence."

Geithner's speech was greeted with laughter according to the London Times.

"Chinese assets [held in Dollars] are very safe," he went on. "We're committed to bringing our fiscal deficits down over time to a sustainable level."

Today General Motors filed for bankruptcy protection, with $30 billion of government money ear-marked for restructuring the auto giant.

GM has already received $20 billion of tax-funded aid.

Economists at Barclays Capital in New York are meantime urging the US Federal Reserve to hike its "Quantitative Easing" of long-term interest rates, Reuters reports, creating three times its planned £300bn of new money to bid up government bonds and push longer-term yields lower.

The Treasury needs to sell a record $2 trillion in new US bonds this year to fund the shortfall between its spending and tax receipts.

"We see the $1000 level [in Gold] as the next obvious target from here," says the daily note from London market-makers Scotia Mocatta.

"The bullish picture for bullion is confirmed by the weekly candlesticks which have seen four consecutive up weeks for gold."

But it will be "interesting" to watch for "bouts of liquidation" in Gold Investment as the price approaches $1,000 says another London dealer.

"It is worth noting that speculators on Comex are now very long," says UBS analyst John Reade, quoted by Dow Jones, "and with no sign of strong inflows into the ETFs, the Dollar must weaken further for gold to make more ground."

Jumping 11% to the greatest level since July '08, the "net long" position in Gold Futures held by hedge funds and other large speculative players rose for the fifth week running in the week-to-last Tuesday.

Speculative gold buying on the futures market, however, remains one-seventh below the record peak hit in January last year, according to data from US regulator the CFTC.

"High returns don't tend to come from high quality assets – but wealth preservation does," says Charles Morris, manager of HSBC bank's $2-billion Absolute Return fund, speaking to Fund Strategy magazine.

His wealth management offering now holds a 10% allocation to gold.

"It's the highest quality asset of all. It's about permanence of long-term value. [Gold's] relative value through time is constant."

Monday morning saw the US Dollar fall through $1.42 per Euro for the first time in 2009.

The Euro gold price touched its best level in 5 weeks at €697 an ounce, but for Sterling investors now Ready to Buy Gold, the price fell as the Pound soared, dropping 0.8% from last week's close at £605 as the UK currency broke new 8-month highs above $1.64.

When the Pound traded at $1.64 in Jan. 2000, the UK Gold Price stood at £175 an ounce. It rose to £220 when Sterling next reached that level in Jan. 2003, and rose further to £230 an ounce, £475 and now above £600 as GBP/USD crossed that price again.

"We do not believe the IMF Gold Sales, should they occur, will harm Gold Prices," said HSBC analyst James Steel last Friday, referring to the possible approval of a 400-tonne sale by the International Monetary Fund.

The United States retains a 17% controlling vote in the IMF. Congressional approval may be sought this week.

Dollar-price gains were meantime also strong Monday morning across the commodities market, with copper breaking above $5,000 per tonne and crude oil adding 2.4% to $67.85 per barrel.

Russia's RTS stock market jumped almost 6%, while the Polish Zloty added nearly 2% vs. the Euro on the currency markets on news that Poland's industrial output shrank at a slower pace in May from April.

Operating profits at Australian corporations fell 7.2% in the first quarter from the end of 2008, new data showed, while cash earning for Japanese workers shrank 2.5% month-on-month in April.

Eurozone manufacturing sentiment improved in May on the PMI index, and rose sharply in the UK.

China's manufacturers reported the third month running of increased output.

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