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
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19
Is There a Stock Market Breakout Ahead? - 6th Nov 19
These Indicators Aren’t Putting to an Economic Resurgence - 6th Nov 19
Understanding the Different Types of Travel Insurance - 6th Nov 19
The Biggest Gold Story Of 2020 - 6th Nov 19
Best Money Saving FREE Bonfire Night Fire Works Show Sheffield 2019 - 5th Nov 19
Is the Run on the US Dollar Due to Panic or Greed? - 5th Nov 19
Reasons Why Madrid Attracts Young Professionals - 5th Nov 19
Larger Bullish Move in USD/JPY May Just Be Getting Started - 5th Nov 19
Constructive Action in Gold & Silver Stocks - 5th Nov 19
The Boring Industry That Hands +500% Gains - 5th Nov 19
Stock Market Chartology vs Fundamentals - 4th Nov 19
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons - 4th Nov 19
Stock Market Warning: US Credit Delinquencies To Skyrocket In Q4 - 4th Nov 19
Stock Market Intermediate Topping Process Continues - 4th Nov 19
Stock Market $SPY Expanded Flat, Déjà Vu All Over Again - 4th Nov 19
How To Buy Gold For $3 An Ounce - 4th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold Slips as U.S. Dollar and Sterling Rally

Commodities / Gold & Silver 2009 Sep 29, 2009 - 11:43 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD fell again at the start of Hong Kong trade on Tuesday, dropping further to near-3 week lows by lunchtime in London at $986.50 an ounce.

Asian stock markets meantime closed the day higher, but European shares fell as the Euro fell back vs. the Dollar and Yen.


The British Pound jumped higher despite a raft of poor UK data, driving the gold price in Sterling below £620 an ounce – down 1.4% from Monday's five-month high.

"Gold needs to stay above $990 on the close to keep our bullish view alive," says a short-term technical analysis from Scotia Mocatta, the bullion bank.

"A break of $990 opens up $972 and $957, the former breakout lines. Topside resistance is now seen at $1000."

But "gold remains very well supported despite recent Dollar strength," counters Walter de Wet at Standard Bank, pointing to a target for the Euro – which typically moves in the same direction as US gold prices – of $1.50 by year-end.

Standard Bank's currency strategists expect the European single currency to hit $1.55 "if not $1.60" early in 2010.

"Combined with seasonal jewelry demand, our gold view remains one of buying on dips," says de Wet, reporting "some physical buying returning to the market" as prices fell to the mid-$980s."

MKS Finance in Geneva, a division of the Swiss refining group, also reports "Asia-based operators seeing jewelry demand pick up in India as the festive period approaches.

"[But] gold will need to see ongoing good physical and ETF demand in order to resist to pressure" from the rebounding US Dollar.

Early Tuesday the Dollar bounced from a 6-month low vs. the Yen beneath ¥88.50, and rose for the fifth day running against the Euro.

Crude oil fell 1% towards $66 per barrel. Short-dated government bonds also fell in price, pushing yields higher.

"Driven by a combination of investment and speculative purchases, extended by technically driven trades, and the lack of any robust demand...be aware of a strong likelihood of [gold] correction early in the fourth quarter" warns a new report from Frederic Lasserre at French banking giant SocGen today, quoted by Bloomberg.

"A certain hesitancy has emerged amongst fast money to buy gold at the moment due to fears of excess long positioning in Comex gold futures," says Swiss bank UBS's London analyst John Reade.

"We continue to expect a deeper correction in gold and silver in coming weeks."

Looking back at the last 10 years of market-beating gold returns, "Investors who dared place some of their eggs in gold in recent years have been nicely rewarded for what they did," says National Bank of Canada economist Matthieu Arseneau.

"However, the time has come now to revise their positions [because] risk aversion is gradually returning to pre-crisis levels and inflation fears should abate."

Looking at the past three decades, "In times of economic recovery, the return on gold falls well short of the return on the stock market," Arseneau says.

His time-frame includes both the "long boom" of 1982-2000 – when US stock prices rose 13-fold but gold fell by two-thirds – as well as the record equity bull of 2002-2007, when US stocks doubled over 60 months and the gold price gained more than 170%.

Over on the data front Tuesday – and ahead of US housing-price and Consumer Confidence data – Japan reported its sharpest ever year-on-year drop in retail prices, down 2.4% in August from Aug. '08.

Spain reported consumer price deflation of 1.0% year-on-year for this month.

Adjusted for inflation, Spain's retail sales fell 4.0% in August – the sixteenth consecutive month of falling sales.

Here in the UK, the early CBI Distributive Trends survey pointed to a rebound in consumer spending.

But the data came against a worse-than-expected fall in GDP, a decline in consumer credit, a sharp drop in money-supply growth, and a fresh surge in the UK's balance of trade deficit to a two-year record of £11.4 billion ($18bn) between April and July.

Today the Bank of England met with leading commercial economists from the City to discuss its program of quantitative easing and the commercial banks' failure to pass the £150 billion spent so far ($225bn) onto consumers and business as loans.

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