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
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
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

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

Gold Positive Outlook

Commodities / Gold & Silver 2009 Jun 09, 2009 - 07:09 AM GMT

By: Adrian_Ash


THE SPOT PRICE OF GOLD ticked north of a tight $6 range Tuesday lunchtime in London, moving 1.4% above yesterday's two-week low to $957 per ounce as Asian stock markets closed lower and the US Dollar eased back on the currency markets.

Government bond prices rose, pushing long-term interest rates lower. Crude oil added 1% to move back above $69 per barrel.

"In quick succession we have seen a number of rumours, the likes of which were not seen when the Dollar was slumping last month," notes Steven Barrow at Standard Bank.

Pointing to false but Dollar-positive news that UK premier Gordon Brown had resigned and that a German bank was on the verge of collapse, "This all suggests that for now at least the market has the bit between its teeth to unwind some of this Dollar weakness," Barrow says.

"In perhaps the next week or two, this psyche could generate more Dollar-supportive rumours and perhaps a stronger Dollar as well."

New data today showed German industrial output falling more than expected in April, down 21.6% from a year earlier.

Japan's machine-tool orders fell 79.3%, while Australian business conditions were seen worsening in the National Australia Bank's latest survey.

UK house prices recorded a 13.0% drop according to official government figures.

The British Pound crept back above $1.61, squashing the Gold Price in Sterling towards last Wednesday's 7-week low beneath £590 per ounce.

Eurozone investors now Ready to Buy Gold saw the price hold flat at €684.50 as the single currency failed to recover $1.40.

"Hedge funds are getting their direction from the currency markets and they have been selling gold on the Dollar's rally," reckons Koji Suzuki at SBI Futures in Tokyo, speaking to Reuters.

"We find regular investors Buying Gold as a hedge when the Dollar weakens."

After credit analysts Standard & Poor's cut the rating of Ireland's government from AAA to AA on Monday, citing a possible cost to tax-payers of €20bn ($28bn) from the recent bank rescues, the International Monetary Fund (IMF) today warned Europe to address its banking crisis and "restore confidence".

Hinting at the relatively tame Quantitative Easing promised so far by the European Central Bank (ECB), "A key missing element is a proactive strategy to deal with [Europe's] weakened financial system," says the IMF's latest assessment, "involving a review of capital needs to manage the recession, a cleansing of the financial system of its impaired assets, and a restructuring of weakened institutions."

Meantime in the United States – where banking shares have gained 49% since March – the government should repeat the "stress tests" which said 10 of the largest 19 lenders needed $75 billion in fresh capital last month, warned the Congressional Oversight Panel on Monday.

Banks have so far announced plans to raise $100bn, but the "stress tests" applied to their balance sheets assumed an average jobless rate of 8.5%.

Last week's jobs data put the 2009 average to date at 8.4%, leaving little margin for error in the Treasury's analysis.

Ten US banks may today be invited to begin repaying the emergency tax-payer funds they've received, according to press reports.

Citigroup will this week launch a $33bn cash raising, also converting $58bn of government funds into equity and leaving Washington with up to a 34% stake in the No.1 US bank.

"It's important that we have all the tools in place [for draining liquidity]," says Barney Frank, chair of the House Financial Services Committee, in a new interview.

"[But] it would be a mistake to start dealing with that before you know when, how, how much, et cetera..."

The Federal Reserve has doubled the liquidity it provides to the US economy since this time last year, growing its balance sheet to $2.1 trillion and sparking fears that inflation will follow unless the excess cash is withdrawn.

But speaking to Congress last week, central-bank chief Ben Bernanke failed to list a new tool – issuing Fed bonds – for withdrawing liquidity, and "We suspect the omission from Bernanke’s litany was not a slip of the tongue," reckons Joseph Abate at Barclays Capital.

"The increased financial liquidity around the world, we expect, will eventually prove inflationary and positive for Gold Prices," says a new report from RBC Capital Markets, quoted by MineWeb in Johannesburg.

But before then, the analysis warns, South Africa's major gold-mining firms could suffer an 80% drop in quarterly earnings unless there's "either a sharp increase in the Gold Price (in Dollar terms) or a weakening of the Rand to deliver meaningful upside from current levels.

"The previously recognised 'value gap' [between SA mining stocks] relative to the Gold Price has now virtually been closed."

Already halving since 1998, South African Gold Mining output will continue to fall until 2014 said new research today, dropping further from 2008's total output of 220 tonnes.

By Adrian Ash

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 , 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 - 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