Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
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
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Going to Run High Until it is Exhausted

Commodities / Gold & Silver 2009 Dec 03, 2009 - 07:39 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF WHOLESALE gold hit yet another record high against all major currencies bar the Aussie Dollar and Japanese Yen on Thursday, peaking above US$1226 an ounce at lunchtime in Hong Kong.

"Volumes are thin. There is less buying in the physical market, and scrap seems to be entering the market faster," says Walter de Wet at Standard Bank.


"We remain cautious of buying gold at current levels."

Early London dealing saw the US Dollar tick higher and gold slip 0.5%, while European stock markets gave back light gains and government bond prices fell.

Crude oil held above $77 per barrel. Gold priced in Euros and Sterling peaked above €812 and £735 an ounce.

"The build-up of [$1200-priced] December call options took place not just on Comex – which expired last month – but also on the over-the-counter market where expiry happens later this month," reckons Bhargav Vaidya, a Mumbai-based commodities advisor.

"Now that the target of $1200 has been reached, markets could correct from Thursday."

"Further gains are possible but the risk of a correction grows," agrees the latest Metals Monthly Asia produced by London's VM Group for BNP Paribas Fortis.

"Metrics such as the marginal cost of mining gold or the price at which the jewelry market can soak up [metal] point to much lower prices, but when investment is this strong they are less relevant."

"Once the buying has been satisfied," says London market-maker Scotia Mocatta in its technical note, "we would expect an equally violent correction. [But] at this point there is no technical pattern to suggest the up move has run its course.

"In one-way directional moves such as this, the unit is going to run until exhaustion."

On the demand side of the physical market, "We have been waiting for the Indian public to 'alter' its perspective on gold for more than a year," writes Edel Tully in her latest Refining Monitor for Mitsui, the Japanese trading house.

Formerly the world's hungriest private gold market, India has been overtaken in 2009 by Chinese households. Mumbai gold prices today rose 1.3% to hit a series of all-time highs, closing at 18,550 Rupees per 10 grams.

Spot gold began the decade at Rs 3,700 for Indian buyers.

"Will gold hit Rs 20,000...?" asks the Economic Times of India in an online poll.

"[At these prices] it is difficult to envisage a sea change in attitude in the near future," says Tully. But "in general, scrap flows do not seem sufficient to temper gold's rise.

"It is clear there is a certain level of underlying physical interest out of the traditional hubs."

US investors wanting to own gold coins meanwhile face both rising prices and higher dealer premiums according to industry sources.
 
"There is price resistance among buyers as many just can't get used to these levels," says Coins Magazine.

"There has been a kind of seesaw effect as premiums rise but bullion remains flat, then premiums stabilize and bullion rises," says the Numismaster website.

The US Mint's suspension of Gold Eagle production has driven up the price of other retail bullion products "such as Krugerrands and Maple Leafs" notes the South Oregon Mail Tribune, quoting a local dealer.

"The premiums on major gold coins, those at or close to an ounce of gold content, now sell for $5-12 per ounce more above the spot price than they did two weeks ago," says Liberty Coin Service's Patrick Heller.

That equals an extra 1% charge on top of the more standard 5% premium typically charged by retail dealers.

"I anticipate that premiums will rise further before the end of the year and that supply shortages will spread to other gold coins and ingots," says Heller.

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

© 2005-2022 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