Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold, Stocks and Commodities Drop as Safehaven U.S. Dollar Soars

Commodities / Gold & Silver 2009 Aug 17, 2009 - 07:53 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD fell sharply against a strong US Dollar on Monday morning, falling through what one Asian dealer called "technical and psychological support at $942" to record the lowest Gold Fix so far this month at $937.50 an ounce.


The "safe haven" flight to US Dollars also pushed crude oil back below $66 per barrel, while base metals and silver lost more than 3%.

Adding to Friday's 0.7% loss despite news that France and Germany crept out of recession between April and July, world stock markets sank 1.4% early Monday on average – the biggest one-day loss in more than six weeks – after Japan reported 0.9% growth in its second-quarter GDP.

Government bond prices rose, pushing the yield offered to new buyers lower. Ten-year UK gilt yields fell to 3.63%, their lowest level since mid-June.

"There is definite downside risk despite Gold's uptrend," say London market-makers Scotia Mocatta.

"Support is close however, and comes in at $932.40."

Commerzbank reckons the last 6 weeks' uptrend is now "exposed", advising in its latest note that "a slide back below channel support should be enough to confirm...the gold market is back under pressure, targeting $925 and then the $904.80 support."

Ex-Dollar, however, the Gold Price was little changed early Monday, rising to £575 an ounce for UK investors and holding above Friday's one-week low against the Euro at €664.

The European currencies also sank against the Japanese Yen, sliding below ¥154 and ¥133 respectively.

The Nikkei stock index meantime dropped 3.1%, unwinding the last two weeks' gains.

Gold Prices at the Japanese Tocom exchange dropped 1.0% to close Monday at ¥2,873 per gram, a new one-month low.

Latest data from the US Gold Futures and options market show speculators reducing their bullish bets on the metal as the price slipped last week.

As a proportion of all hedge-fund and other speculative positions, however, bullish bets rose to their  greatest level since the end of 2007. The volume of those bets is smaller by more than one tenth.

Bloomberg's weekly survey of professional gold traders and analysts says that only 13 out of 27 interviewed last Friday expect the Gold Price to rose this week.

"[Gold's drop] is all on the back of the Dollar," says Walter de Wet at Standard Bank, speaking to the newswire today by phone.

"If the Dollar continues to strengthen, it's going to mean lower for the Gold Price."

"If investors want to benefit from gold's performance regardless of the currency," claims Stephan Mueller of gold trust-fund promoters Julius Baer, "the logical thing to do is to neutralize the unwanted currency effect with currency hedging."

"Not surprisingly," says the Investor's Chronicle magazine, "he notes that the currency-hedged Julius Baer Physical Gold Fund does just this."

European gold owners hedging their currency against the Dollar would also have incurred extra costs to little end, BullionVault data show, since the metal has also tripled against Euros, Sterling and Swiss Francs over the last ten years, more than doubling since this point in 2004.

Swiss private-bank Julius Baer also offers structured products in gold, promising to return 100% of investors' capital even if the Gold Price falls.

On Friday the UK's Financial Services Authority said that it's extending a review of structured products linked to the collapse of Lehman Brothers – a major player in underwriting such derivative products – after the ombudsman received 150 complaints from investors in Lehman-backed structured products.

Elsewhere in financial services today, Britain's retail banks need to close one-in-three of their UK branches or face a 50% drop in return on equity, concludes a new study by consultancy group Bain.

In the United States, reports AP, retail banks added a "breath-taking" 10,000 branches in the last 5 years, squeezing margins across the setor.

The cost of rescuing savers at the 102 banks that have failed so far since the credit crunch began in August 2007 now averages 25% of assets, data from the Federal Deposit Insurance Corpoation (FDIC) shows.

During the last US banking downturn of 1989 to 1995, that figure was 19%, but "Compared to the savings-and-loan crisis, banks these days have gotten much bigger and the economy has gotten much bigger," says Bob Patten, analyst at Morgan Keegan & Co.

Today in Luxembourg, the European Commission approved the German government's €7 billon ($9.9bn) rescue of IKB Deutsche Industriebank AG.

One of the first German banks hit by the banking recession in 2007, IKB failed due to large losses on structured investment products, Reuters says.

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