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 Falls Below $1,000 as U.S. Dollar Bounces

Commodities / Gold & Silver 2009 Sep 14, 2009 - 07:40 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD slipped below $1,000 an ounce early Monday in London dealing, slipping 1% from last week's record New York close as the US Dollar bounced on the currency markets and all other asset classes – including government bonds – ticked lower together.



Crude oil fell below $69 a barrel, while Asian stock markets averaged worse than 1% losses.

Germany's Dax index dropped 0.9%, unwinding the last two days of gains.

The Dollar knocked two cents off the British Pound and one cent off the Euro, helping to hold the Gold Price above £600 and €685 an ounce respectively.

Both US and German government bonds also fell, pushing the yield offered by 10-year Treasuries up to 3.37%. Ten-year Bund yields rose to 3.25%.

"Although we remain bullish on Gold, upward momentum might fade," says Standard Bank in Monday's Commodities Daily, pointing to data released after Friday's close by US regulator the Commodity Futures Trading Commission.

Speculative betting by hedge funds and other non-industry players in Gold Futures jumped last week, driving up their "net long position" of bullish minus bearish bets by the equivalent of 161 tonnes week-on-week, according to Standard's maths.

"[That's] the largest weekly rise in the speculative position in at least two years. At the same time, the net long speculative positions have risen to 40% as a percentage of open interest – also the highest in more than two years."

"We recommend that nimble investors take profits on any long gold and silver positions, looking to re-enter after a correction," agrees UBS metals analyst John Reade in a note to clients, widely reported on the internet.

"Considering the speed of the increase, and on the absolute level, of the net speculative position, we are cautious about the near-term outlook for the Gold Price.

"Customers remain positive about the longer-term prospects...but are concerned that speculative positions are a little overblown."

Overall in the week to last Tuesday evening, CFTC data show, the total number of open contracts in US Gold Futures and options leapt by almost one-fifth, the biggest week-on-week increase since gold broke through $400 an ounce in the fall of 2005 according to BullionVault analysis.

Bullish contracts held by hedge funds and other speculative, non-industry traders rose to 92.9% of their total betting on gold, rising well above the 5-year average of 82% but remaining below the all-time peak of Oct. '07.

Back then, Gold began a six-month surge – spurred by the Federal Reserve slashing US interest rates as the first wave of bank failures approached – that took it from $720 to $1,032 an ounce.

Over on the other side of the gold derivatives market, meantime, commercial traders acting for gold industry players last week raised their bearish betting above three-in-every-four contracts held, just surpassing Oct. '07 and the highest level since Jan. '06.

That month the Gold Price began a 36% jump to the May 2006 spike at $725 an ounce.

"Gold is still above its 12-month moving average, and there is not quite the frenzy of public interest and buying you would expect to see at a top," notes technical analyst Martin Pring of the eponymous Pring Research in a note.

"Nevertheless, I am a bit suspicious [of gold's run to $1,000] since the Dollar isn't breaking down, and usually the Dollar and gold go in opposite directions."

"When a can is placed on a stove burner, the pressure builds up inside the can," counters Richard Russell, author for the last five decades of the much-respected Dow Theory Letter. "At some point, we know not exactly when, the can will explode and the pressure will be released.

"That, I believe, is where Gold is."

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