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
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, But Basic Strength Remains Intact

Commodities / Gold & Silver 2009 Oct 16, 2009 - 07:14 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD ticked lower in early London trade on Friday, slipping through yesterday's low of $1045 per ounce to hold unchanged on the week

Dropping 2.5% from Wednesday's new record high for Dollar investors, the gold price headed towards the weekend lower against all other major currencies bar the Japanese Yen.

The gold price in Sterling – down at an 8-session low of £640 an ounce – stood more than 5% beneath Tuesday's 7-month high by lunchtime in London.

"Bearishness creeping into the daily chart," says Phil Smith's analysis for Reuters Technical India. "[Gold] looks vulnerable to a further correction, particularly if the oil price corrects as well.

"Volume [in US gold futures] has also come off a bit – another factor for the downside."

With the Diwali festival of lights celebrated across the Hindu world tomorrow, "Some Indian buying has picked up," reports one London dealer, "but we expect this to retreat again fairly quickly.

"Perhaps that the supply side is winning the battle at the moment, with physical sales appearing in Asia today – the third day running we have seen this."

"Selling in the physical gold market is adding to resistance," agrees Walter de Wet at Standard Bank. "However, we still favour buying gold dips. Gold support is at $1402 and $1035."

Broader financial markets also held flat Friday morning, capping European stocks with a 2% gain for the week and keeping 10-year US Treasury bond yields at 3.45%.

The major commodity-price indices slipped from fresh 12-month highs. Crude oil lost 50¢ from Thursday's new one-year high above $77 per barrel.

"People seem to be getting tired of buying gold," said a Tokyo analyst to Reuters this morning. "[But] the Dollar's outlook is weak, so gold's basic strength will be kept intact."

"It's all about the Dollar still," agrees Jon Nadler of Canadian refining group Kitco, "and will remain the case for the foreseeable future."

Noting that Thursday's drop was the first move lower in 10 trading sessions, Scotia Mocatta's technical analysts point to the "Doji" warning in Wednesday's action – where prices opened and ended the day virtually unchanged after a run of strong gains.

"With [Thursday's] lower close, the reversal is confirmed. We expect to see liquidation of long gold positions over the coming days. Initial pull back target seen at former high of $1024."

Here in London, meantime – where a Bank of England policy-maker said this week that it's "uncertain" about extending its quantitative easing program of buying government debt with newly created money – the central bank was offered sharply conflicting advice from two leading private economists.

"Sterling is clearly a currency that's been seriously's extremely weak," said HSBC chief economist Stephen King in an interview.

"There's always a risk of a Sterling crisis...The problem with admitting that [the central bank is] happy about the Pound falling it is that a small fall can turn into a very large fall.

"There's definitely a danger there."

But Roger Bootle – chief economist at Deloitte and author in the late 1990s of The Death of Inflation – says the Bank of England should push its money-creation scheme "as far as it takes" to avoid a deflationary recession.

Citing a further 20% drop in house prices, the Bank "will have to go a lot further" in buying government bonds to squash interest rates and boost the money supply, Bootle believes.

"In the first instance, they should be prepared to go another £50 billion [$81bn, a 28% increase] and maybe even another £100 billion [$163bn, a 57% increase]...but the point is being prepared to go as far as it takes."

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

© 2005-2022 - 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