Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Bounces From 5% Plunge

Commodities / Gold & Silver 2009 Nov 27, 2009 - 06:55 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF PHYSICAL gold sank in late Asian dealing on Friday, losing 4.7% from Thursday morning's new all-time highs but quickly recovering one-third of that loss as London trading began.

"We would buy this dip," wrote Walter de Wet at Standard Bank as gold rose back through $1150.


Today's AM Gold Fix in London – used as a clearing and reference price worldwide – was then set at $1164.50, a five-session low.

"We still see support in the physical market," de Wet explains. "We also believe the renewed focus on credit risk, combined with ample liquidity, should keep investment demand for gold high."

Looking ahead, however, "We remain mindful of what can happen in February/March...a very weak period for seasonal demand. From what we saw at the start of 2009, physical selling could be intense."

Gold's drop – its fastest move since mid-March – mapped sharp falls in Asian stock markets that extended yesterday's broad financial sell-off after the Dubai government requested a "debt freeze" for one of its state-owned real-estate investment firms.

Tokyo's Nikkei lost 3.2% on Friday. Seoul was down 4.7%, Hong Kong 4.8%, and Shanghai 2.4%.

The US Dollar jumped more than 2% on the forex market, meantime, bouncing hard from 15-month lows to the Euro and a fresh 14-year low to the Yen.

Typically moving in opposition to Tokyo stock prices, the "safe haven" Japanese currency gained some 2.5% against the higher-yielding Euro, Aussie and Canadian Dollars, and British Pound.

"There was good offer above $1195 which kept a lid on gold," said one Hong Kong dealer's note this morning.

"Liquidity was pretty poor...probably due to New York holiday and traders switching [from Dec. to Jan.] future month."

This week's expiry of December gold options at the Comex in New York saw a position worth 93 tonnes – equal to 13 days of global mining production – fail to achieve its price-target of $1200 an ounce.

Latest data from US regulator the Commodity Futures Trading Commission said that last week speculative futures and options traders were "net long" of some 970 tonnes – almost twice the 5-year average.

"Our intervention in Dubai World was carefully planned and reflects its specific financial position," said Sheikh Ahmed bin Saeed al-Maktoum, head of the city's Supreme Fiscal Committee, in a statement aimed at reassuring creditors of the United Arab Emirates' other state-backed companies last night.

"The Dollar's rally was to be expected" on Thursday's debt freeze request at Dubai World, writes Steven Barrow at Standard Bank this morning. A sharp widening of bid/offer spreads on corporate and government bonds worldwide was also no surprise, he says.

"But if credit spreads continue to widen, we'd question the ability of the Euro to make [further] gains...In June 2009, global banks had international loans of just over US$32 trillion outstanding. Almost half of this is owed to Eurozone banks. [So] when non-domestic credit problems arise, they are more likely to affect Eurozone banks than those in the US."

Averaging almost +0.50 over the last 10 years, the daily correlation between gold and the Euro vs. US Dollars shows a strong statistical significance, with the single currency and bullion typically moving together against the greenback.

The correlation coefficient would stand at +1.0 if the Euro and gold moved in lockstep. If they always moved in perfect opposition, it would read -1.0.

On a rolling one-month basis, the correlation between gold and Euros tends to decline when the single currency falls against the Dollar, turning negative during gold's strong bull runs of late 2005 and early 2009.

"There is no doubt that the [currency] market has moved too far in one direction," said Hirohisa Fujii, Japanese finance minister, to reporters in Tokyo today.

"Moves right now [in USD/JPY] are extreme, and it would be possible to take appropriate measures," he added – taken to mean central-bank intervention to support the Dollar by selling Yen on the foreign exchanges.

"I would respond flexibly to a joint [G7] statement on currencies."

Gold priced in Japanese Yen sank more than 6% this morning from Thursday's early 26-year highs, but swiftly bounced back above ¥3200 per gram, regaining well over a third of its drop.

The gold price in both Euros and Sterling dumped 3.7% before turning higher, only briefly dipping below €768 and £700 an ounce respectively.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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