Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
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

Market Oracle FREE Newsletter

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

Gold Hits 5-Week Low Ahead of Fed's "Dollar Devaluation" Vote

Commodities / Gold & Silver 2009 Jun 22, 2009 - 09:16 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE SPOT PRICE OF physical gold sank to new 5-week lows at $924 an ounce early in London on Monday, recording the lowest Gold Fix since 18th May as the US Dollar held steady on the foreign exchanges and world stock markets fell.


Crude oil dropped back to $68.50 per barrel, and government bond prices were bid higher across the board, pushing the yield offered by 10-year US Treasury debt down to 3.72%.

Last week Nobel-winner Paul Krugman and US presidential advisor Christina Romer argued in the New York Times and Economist respectively that "It's much too soon to give up on...aggressive monetary policy and deficit spending."

Ahead of this Wednesday's monetary policy decision in Washington, "the Fed can't let up on the monetary gas at this stage – let alone apply the monetary brake," says Steve Barrow at Standard Bank.

"We believe that the Fed is engaged in actively devaluing the Dollar against local goods and services. This week it might even commit to more [quantitative easing] asset purchases, or at least switch the mix towards more Treasuries and less mortgage-backed securities.

"If this still implies a monetary policy that devalues the Dollar internally, the Dollar should devalue externally as well."

Little changed from Friday's close, however, the Dollar was today joined by most other major currencies in pushing gold lower.

Gold Futures traded in Tokyo for delivery in April 2010 slipped 0.8% against the Yen to ¥2,892 per gram, only a little above last Wednesday's five-week low.

UK buyers saw the Gold Price in Sterling drop to fresh five-month lows beneath £563 an ounce.

For Eurozone investors now Ready to Buy  Gold, the price held at €666 an ounce – the very bottom of the last 12 weeks' trading range.

"The question revolves around how much Gold Investment demand do we have, how strong is it, and what happens to the gold market when investment demand goes from strongly positive to neutral or negative," says Paul Walker, CEO of London consultancy GFMS, to Canada's Financial Post.

Pointing to the risks of either strong inflation or a sound economic recovery, "We're on the cusp of two very different scenarios," Walker believes. "And I have to be intellectually honest and say that I don't know which one it is going to be."

Continuing to show a strong correlation with changes in the Gold Price, the total volume of US Gold Futures and options outstanding last week fell 3.6%, new data from regulator the CFTC said late Friday, dropping to the lowest level since early May.

The "net long" position held by hedge funds and other large speculators – equivalent to a call on 569 tonnes – fell by 9%.

New York's SPDR Gold ETF – the world's single largest gold-holding trust fund – ended last week unchanged at 1,132 tonnes.

In the official sector, meantime, new data from the World Gold Council today showed Russia adding 17 tonnes to its gold reserves so far in 2009, taking the Kremlin's hoard to tenth position in the central-bank rankings – and overtaking the European Central Bank (ECB) in Frankfurt – with 537 tonnes.

Equal to 4.0% of Russia's total currency reserves, Moscow's Gold Bullion stockpile has swelled by 15% since this time last year.

France and Sweden have continued to sell gold in contrast, divesting 41 and 4.5 tonnes respectively within the Central Bank Gold Agreement, the five-year treaty which caps sales by its 15 signatories to 500 tonnes per year.

The 400-tonne IMF Gold Sales approved last week by the US Senate are now expected to form the basis for renewal of the CBGA when it expires in September.

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