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 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
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

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

Gold Steady as Deflation Hits Commodities

Commodities / Gold & Silver 2009 Jun 17, 2009 - 08:09 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD slipped for US and Euro investors but rose towards 3-session highs for UK buyers on Wednesday as the British Pound fell on worsening economic news.

World stock markets dropped along with commodity prices, while new US data showed Consumer Price Inflation sinking to minus 1.3% in May, the sharpest year-on-year deflation in prices since Jan. 1950.


"Gold is relatively safe from the current correction in the commodities complex because it didn't rally as much," said Wallace Ng at Fortis Bank in Hong Kong to Bloomberg earlier.

"We expect gold to trade in the $920 to $950 range in the near term, while holding on to its close relationship to the Dollar."

Using the Gold Price to try and spot currency trades, "Gold has been a very good guide recently to the direction of Euro/Dollar," says a note from Citigroup analysts, also quoted by the newswire.

"Gold has just completed a well defined head-and-shoulders top with a break of $945 that suggests a move below $900 again. Euro/Dollar is lagging, but setting up a very similar pattern with a neckline at $1.3815."

Early Wednesday the Euro retreated one cent to $1.3820, holding the Gold Price in Euros 0.5% above Monday's five-week low of €669 per ounce.

For UK investors now Ready to Buy  Gold, the price bounced off yesterday's fresh 5-month lows at £567 after the official data agency reported a 12-year record in redundancies, plus a sharp fall in average earnings after accounting for inflation.

The UK division of fast-food giant McDonalds today said it's "being swamped" by some 2,200 job applications every day, including from ex-bank workers and former teachers as well as new graduates.

UK sales led McDonalds' growth of 8.4% across Europe in May.

"Are central banks like the Bank of England in a position to conclude that more, less, or the same amount of Quantitative Easing is needed?" asks Steve Barrow at Standard Bank in his G10 Daily analysis.

"We suspect its probably the same, or possibly more," he says after concluding that buying up government bonds and mortgage-debt with freshly created cash has yet to boost the broad money supply.

"Next week the Fed could switch the mix of asset purchases, perhaps buying more Treasuries and less Mortgage-Backed Securities. We certainly don't expect the Fed to plot some sort of exit strategy yet and nor the BoE.

"This could be good news for government bonds."

British gilts rose together with German bunds early Wednesday, while US Treasuries eased back but held the 10-year yield near two-week lows at 3.67%.

Crude oil retreated below $71 per barrel. Base metals and agricultural commodities also slipped.

Minutes from the Bank of England's latest policy meeting today showed the 9-member committee was unanimous in holding interest rates at 0.5% and continuing with the current £125 billion ($200bn) program of Quantitative Easing.

Economists interviewed by Bloomberg News said next Federal Reserve policy statement will restate its commitment to cheap money and bond-buying in a bid to prevent longer-term bond yields risign further.

"When equities are considered too risky, people move to corporate bonds, then to gilts, then to US Treasuries," says Mark Dampier, head of investment research at UK brokers Hargreaves Lansdown.

"When those are too risky, the only place left is gold," he tells MoneyWise magazine.

Tuesday saw the volume of Gold Bullion held to "back" the value of Gold ETFs worldwide unchanged as investors maintained their position, but the price "certainly seems to be stuck in the doldrums at the moment," says Darren Heathcote at Investec Australia, speaking to Reuters.

"I think ultimately, unless we see some kind of negative fallout again from the financial sector, the hopes are good for a continued recovery in metal prices and gold to benefit further."

Today the Obama administration in Washington unveiled detailed and sweeping proposals for new regulations right across the banking and retail finance sector.

Here in London, tonight's annual Mansion House speech by chancellor Alistair Darling will warn bankers that "Anyone who thinks that we can carry on as if nothing has happened should think again."

The New Labour administration took banking over-sight away from the Bank of England in 1997, putting the newly-created "principles based" oversight of the Financial Services Authority (FSA) in its place.

"Having gone too far in deregulating, which contributed to the current crisis," writes hedge-fund speculator George Soros in today's Financial Times, "we must resist the temptation to go too far in the opposite direction.

"While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences, therefore regulations should be kept to a minimum."

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