Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Investment Underpinned by Wealth Preservation as Inflation Systemic Risk Rise

Commodities / Gold & Silver 2009 Sep 07, 2009 - 08:53 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD held near last week's close in Asia and London on Monday morning, trading at $994 an ounce as analysts agreed $1,000 would soon be reached but argued whether that price is sustainable.

"Overall, the big picture [for gold] remains bullish," says the Sept. edition of Metal Matters from London market-makers Scotia Mocatta.


"The combination of a correction to the current over-extended equity rally, and the knock this would give investors and banks, could well see more investors turn to bullion again as they seek refuge."

"Until confidence returns, Gold is likely to remain sought after."

"Investment demand for Gold is still very strong, and that is going to help drive the price higher over time," says Helen Henton, head of commodity research at Standard Chartered, speaking to the London Telegraph.

"We think it's going to break $1,000 by the fourth quarter, mainly driven by a weakening US Dollar."

Early Monday saw the Dollar drop to a one-week low vs. the Euro and a fortnight's low against the Pound.

For both UK and Eurozone investors looking to Buy Gold today, the price dipped towards Friday's lows at £604 and €692 per ounce respectively.

World stock markets meantime jumped, adding 2.4% to the UK's FTSE-100 on light volume, while crude oil futures ticked higher above $68 per barrel.

New York was closed for the Labor Day holiday. Long-dated government bond prices slipped, pushing 10-year Treasury yields up to 3.44%.

"Gold will be able to temporarily break through the $1,000 mark," says Eugen Weinberg, senior analyst at Commerzbank, "[but] there is insufficient fundamental support to allow for a sustained rise beyond this level."

"Inflation expectations are idle, physical demand is absent and scrap sales could only intensify at these prices," reckons Andrey Kryuchenkov at VTB Capital in London. "As soon as risk appetite comes when the markets settle down ahead of the fourth quarter, gold will suffer a painful correction."

Gold imports to India – formerly the world's No.1 consumer market, but overtaken by China's Private Gold Demand so far this year – may total between 460 and 550 tonnes in 2009, according to estimates made at an industry conference in Goa on Sunday, down by 25% and more from 2008.

Imports to date are down more than 50%, says the local office of trade-marketing group the World Gold Council.

"We may end up being just about 35% lower than last year," reckons independent analyst Bharghav Vaidya, speaking to Reuters. "People who were de-stocking will buy. Plus there will be compulsory buying for [India's Sept-Oct.] festivals."

"Gold should benefit from a weaker Dollar over the long term [and] another factor expected to help prices is physical demand from consumers in developing economies," write David Haughton, Andrew Breichmanas and Bart Melek in a new report for Canada's BMO Capital Markets.

"As disposable incomes increase, [it's] fuelling Gold Prices as a store of value and status symbol."

"Wealth preservation is underpinning" new Gold Investment, says Walker – quoted by South Africa's Mineweb today – "[and] there's no doubt that the inflationary argument has been gathering pace. Expectations of inflation...will continue to dictate the dynamic of the gold price."

Assigning last week's 4.1% jump to "a few fairly significant lumpy transactions" in an otherwise quiet summer market, Paul Walker of the GFMS data consultancy says current Gold Prices create "a little more downside risk in the short term."

Looking at the threat of financial default – the key driver of gold's first break above $1,000 an ounce, when Bear Stearns collapsed in March 2008 – "Systemic risk remains in the global financial system, [but] it is much less than the start of the year," writes Walter de Wet at Standard Bank today.

"Credit and default risk have declined [according to credit-default swap prices] making assets such as equities more attractive. Yet despite the decline in risk, Gold remains well supported. We expect this support to continue into fourth-quarter 2009 and first-quarter 2010."

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

© 2005-2022 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