Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Daily London Gold Market Report - Gold Rallies Whilst Stocks Fall

Commodities / Gold & Silver Jul 11, 2007 - 08:54 AM GMT

By: Adrian_Ash

Commodities

OLD TRADED $2 above Tuesday's US close in the first-half of London trade on Wednesday, approaching lunchtime just shy of $666 per ounce.

Aside from growing demand for investment gold, "additional buying in gold also comes from the strong support around the $650 level," said Pradeep Unni at Vision Commodity Services in Dubai to Reuters earlier.

"Every time gold slips below $650, physical demand [for jewelry fabrication] is seen to creep in. This has been a trend for the last four months."


"The future tone is strong," agrees Yukuji Sonoda, precious metals analyst at Daiichi in Tokyo . "$650 is the bottom price."

This morning's move in gold prices came even as global stock markets sold off – breaking the pattern of gold moving in lock-step with equities seen so far in 2007, and following on from yesterday's 148-point loss in the Dow Jones index on Wall Street.

After Home Depot, the world's largest home-improvement store, forecast an 18% drop in earnings per share, Standard & Poor's warned it may cut the credit ratings awarded to $12 billion of subprime mortgage-backed bonds. Just before the US close, Moody's Investors Service downgraded its ratings on $5.2 billion in mortgage-related debt.

The slump in US consumer spending and house prices hurt the Nikkei in Tokyo today. The index lost 1.1%, led lower by insurance and export stocks, as the Japanese Yen rose on the currency markets.

"It boils down to a fall in US stocks and the stronger Yen," reckons Tsuyoshi Nomaguchi, a strategist at Daiwa. "The market is now watching for a rebound in the US market because that would also bring back the Dollar."

In London , the FTSE100 index stood 0.6% lower by late morning. "It has the taste of what we saw in 1998 with the bond crisis," according to Tom Hougaard, chief market strategist at margin-brokers City Index. "With these subprime mortgage lenders, we are going to be in for a volatile summer."

Government bond prices continued to rise in anticipation that the US Federal Reserve will act quickly to cut Dollar interest rates, bailing out the subprime mortgage sector. The yield on 10-year US Treasury bonds dipped to 4.99%, its lowest level in a week and 19 points lower since Monday. Ten-year German bund yields dropped 5 points to 4.53%.

Energy prices continued to rise, however, even as interest rates fell in the markets. Brent crude oil broke above $76 per barrel late on Tuesday, a new 11-month high, as US gasoline prices rose on news of forced refinery shutdowns in Texas, Kansa and now Indiana.

Speculative long positions in crude oil futures are now at an all-time high, according to Barclays Capital. Net-long positions rose by 43% in the week ending July 3rd.

Back in the gold market, the initial move in Dollar prices today was matched by the Sterling price of gold, up 0.5% overnight. But for British investors gold then pulled back to reach lunchtime near yesterday's lows below £327.50 per ounce as the Pound rose to a fresh quarter-century high against the US Dollar above $2.0300.

French and German investors found the Euro price of gold trading €3 per ounce below the week's high at €483.50 as the Euro rose above $1.3770. The Dax index of German stocks, heavily dependent on manufacturing exports, dropped 1.8% to hit a three-week low despite assurances from the Jürgen Stark, an executive member of the European Central Bank, that the Euro's current strength reflects strong economic growth. It remains within a range seen before the launch of the Euro as a convertible currency in 1999, he said.

Today's fresh slump in the Dollar followed a long, dry speech by Ben Bernanke, chairman of the US Federal Reserve, last night. Rather than addressing the fact that 18 of the world's top 20 central banks are now presiding over double-digit growth in their money supply – and making no mention of the collapse in subprime mortgage-backed assets, Dr.Bernanke spoke about anchoring "inflation expectations". He also noted how his predecessor, Paul Volcker, restrained the US public's long-term inflation expectations – in turn tempering the actual rate of inflation by curbing wage demands and speculation – by raising the Fed's rate of interest.

With bond yields now falling as energy prices increase yet again, might "strong medicine" be required? A cut in Fed interest rates now would be sure to reduce the real rate of interest paid over and above inflation – a situation that typically leads investors across the world to buy gold in defense.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Gold prices live | Latest gold market news
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 2007

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