Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Gold Continues to Track the U.S. Dollar

Commodities / Gold & Silver 2009 Jun 29, 2009 - 06:55 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE SPOT PRICE of gold bullion rose 0.7% from an early dip to $936 an ounce in London on Monday, lagging a 1.0% rally in European equity markets.

Crude oil recovered to just below $70 per barrel, despite a cut in global oil-demand forecasts at the International Energy Agency.

Copper rose as Shanghai reported a sharp drop in stockpiles, but long-dated government debt prices also rose, pushing the yield offered by 10-year US Treasuries down to a five-week low of 3.47%.

"The main driver of gold at the moment is moves in the US Dollar," writes UBS chief metals strategist John Reade in a note to clients quoted by Bloomberg.

Pointing to weak jewelry demand and subdued Gold Coin and small-bar sales, "At the moment, Gold ETF inflows are associated with fear, not greed, and there has been less fear around recently," he adds.

Monday morning saw the US Dollar slip back to $1.40 per Euro, while the British Pound re-tested resistance above $1.6570.

That capped the Gold Price in Sterling below £569 per ounce, more than 18% below Feb.'s record high.

Citing "a busy week of data releases" between now and Friday's Fourth of July holiday on Wall Street, "the second-quarter [of 2009] draws to a close on Tuesday," adds Walter de Wet at Standard Bank, "which might see portfolio rebalancing and short-term tactical positioning of funds and may add to the volatility.

"While a week is a long time in these markets, precious metals could stay range-bound until at least Thursday, when we see the ECB interest rate decision as well as the release of US non-farm payrolls."

New data released early Monday kick-started the week with a worse-than-expected drop of 29.5% in Japan's Industrial Production last month from April.

Sales at larger Japanese Retailers sank 6.5% month-on-month.

Industrial confidence across the 16-nation Eurozone meantime recovered further from March's record low, but it remained deeply negative according to the European Commission's latest survey.

On the monetary front, New Zealand's M3 supply showed much slower-than-hoped growth for May, while here in the UK, City corporations such as stock brokers and investment funds joined households and non-financial firms in suffering a sharp slowdown in money-supply growth.

Lending to businesses outside the Square Mile and Edinburgh's financial district shrank for the second month running.

Across in Beijing, in contrast, China Business News today quotes cabinet-linked economist Wei Jianing warning that 20% of new local bank lending is going into stock-market speculation, with a further 30% going into domestic Chinese real estate.

"Gold weekly chart is showing as an 'Outside Up' week," says last Friday's closing note from London market-makers Scotia Mocatta.

"From a Fibonacci retracement perspective gold bounced off 913, which is its 38.2% retracement support from the 865 to 990 up move," the technical analysis adds, setting an initial target of $951.50 with support rising to $933 an ounce.

Latest data from US watchdog the Commodity Futures Trading Commission (CFTC) showed both the ever-bullish speculators and ever-bearish commercial traders pulling in their horns last week.

Overall, the total volume of all Comex Gold Futures and options outstanding shrank by almost 2%, hitting a 6-week low alongside the "net long" position held by hedge funds and other large speculators.

Amongst commercial traders acting for refineries, bullion banks and jewelry wholesalers, the bullish ratio measuring their long-gold positions ticked higher from a 20-month low. But it remained very depressed as a proportion of their gold betting at 28.4%.

Meantime for private investors, "Our research points to a failure to diversify adequately," says Marcus Grubb at gold-miner funded marketing group the World Gold Council today.

Surveying more than 300 advisors and over 300 private investors in the United Kingdom, new research from the WGC shows half of all investors wanted "capital preservation" even before the financial crisis began.

Their advisors, in contrast, were focused 2-to-1 on capital appreciation.

"Investors were simply not advised to invest in those assets with the best diversification properties," says Grubb.

Some 83% of investors said their advisors had no position or viewpoint to offer whatsoever on gold, according to the WGC's survey.

A new book published this week by risk-management and derivatives specialists Risk Books – Inflation Risks & Products – covers index-linked bonds, real estate and commodities under a chapter on "traditional assets".

Gold and precious metals do not feature at all in the table of contents.

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