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
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 Bounces on Strong U.S. GDP Economic Stimulus Result

Commodities / Gold & Silver 2009 Oct 29, 2009 - 08:39 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose $10 from last night's 3-week low of $1027 on Thursday morning in London, gaining as Asian stock markets closed the day 1.5% lower and the United States reported an end to its economic recession.

GDP growth during June-to-Sept. was estimated at 3.5%, much-stronger than analysts forecast, as domestic prices also rose sharply – up 1.6% from a year earlier.

Ahead of today's $31 billion auction of new 7-year debt, the yield on mid-dated US Treasury bonds ticked up to 3.05%.

Seven-year yields have averaged 2.77% in 2009-to-date.

"[Gold] found some physical buying in Asia overnight," says one dealer.

"Major price support is seen at $1021 from the early highs of gold in September," says Scotia Mocatta in its daily note.

Over on the currency markets on Thursday, the Dollar fell hard on the Census Bureau's GDP report, capping the rebound in Gold for non-Dollar investors.

Sterling gold prices rose to £630 an ounce from Wednesday's one-month low at £626.

The gold price in Euros crept back above €701 an ounce.

'The Euro is not particularly strong relative to the Yen, the Swiss Franc, the Canadian or Australian Dollars or several other currencies," noted European Central Bank policy-maker Christian Noyer yesterday.

"The question of the relationship with the Dollar is not specific to the Eurozone."

After the US Dollar rose for 3 sessions running late Wednesday, "Ongoing profit taking may continue to weigh on the bullion market, should the Dollar remain firm," said HSBC analyst James Steel in a note.

"The risk of adding longs under current financial conditions, at current prices, surely outweighs the benefit," concurred Walter de Wet at Standard Bank.

"We foresee more risk aversion towards the end of the week."

Holdings in the SPDR Gold Trust – the world's largest gold ETF – shrank by one tonne for the third day running on Wednesday, dropping to 1104 tonnes.

Open interest in US gold futures also fell to a 3-week low, dropping below half-a-million contracts.
"Gold is not an inflation hedge. It is a crisis hedge," says Graham Bentley, head of investment marketing at the £35 billion Skandia UK, "and crises do not necessarily involve inflation.

"Despite last year's market mischief, we are not in the same league as the 1970s' hyper-inflation and global recession. On the contrary, evidence that the current recession is over is visible across the globe, if less so in the UK."

New data from the Bank of England here in London today showed lending to non-financial companies shrinking by 3.4% from a year earlier in Sept. Lending to UK households rose by 2.0% annually, the slowest pace on record and down from a 10-year average of 10.5%.

Consumer confidence in the 16-nation Eurozone came in below expectations. New US jobless claims for last week were also worse than analysts forecast.

A jump in US imports – rising in price by 10% annualized – was the main drag on America's third-quarter GDP growth.

Consumer spending led the 3.5% headline, driven by big-ticket shopping on white goods and cars, with the "cash for clunkers" program funding $4,500 rebates on auto purchases.

New spending on housing projects rose 23% annualized. The $8,000 tax credit currently given to first-time buyers – and due to expire on Nov. 30 – is currently being debated in Congress.

European stock markets reversed early losses on the news, and US stock futures turned upwards.

Australia's No.1 gold mining firm Newcrest today said it's looking for acquisition targets and forecast rising prices ahead, but said its strong local currency is hampering domestic profits by raising costs.

Gold Fields Ltd – Africa's No.2 producer – warned that proposed energy-price hikes by South Africa's state-owned Eskom will sharply increase its production costs.

"It's too early to give the full impact on the business, and we are evaluating it," CEO Nick Holland told reporters, forecasting a 17% increase in costs before accounting for "knock-on" effects.

Gold and platinum production in South Africa – the world's No.3 and No.1 respectively – was briefly brought to a halt in early 2008 by country-wide power cuts, caused by a lack of infrastructure investment and maintenance.

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