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
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
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

Volatile Gold Holds Support

Commodities / Gold & Silver 2009 Dec 08, 2009 - 08:38 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD reversed Monday's 2.4% rally vs. the Dollar early today, only to bounce sharply as world stock markets fell and the Euro currency dropped to a one-month low beneath $1.4750.

The gold price in Sterling and Euros held above £700 and €775 respectively.


Crude oil fell through $73 per barrel. US Treasury bonds rose, pushing yields lower.

European equities lost almost 2.0% by lunchtime in London.

"Key technical support at 1138 once again found good gold-buying interest [on Monday]," says a technical analysis from Scotia Mocatta – "the low two weeks ago when the Dubai announcement caused a quick drop in the metal."

"The VIX [volatility index of US stock options] must approach 20% before we would see upside for precious metals," says Standard Bank, because only that would "signal a substantial increase in risk appetite."

Greece's government bonds were today put on "negative watch" by credit-rating agency S&P, while Fitch Ratings downgraded the Eurozone's seventh-largest economy below A-grade for the first time in 10 years.

Fitch cited "concerns over the medium-term outlook for public finances given the weak credibility of fiscal institutions and the policy framework."

It also confirmed the A+ rating of BHP Billiton, the world's biggest diversified mining group.

"There's a lot of rumors about Hungary's debt too," said a City forex trader by phone to BullionVault today. "And Ireland.

"If the break of $1.4750 follows through, we could see the Euro fall hard to year-end."

Back in the bullion market, rumors "doing the rounds" in Hong Kong said an Asian central bank was buying gold.

Several analysts agreed that the gold price's "unexpected reaction" to Friday's data – dropping 5% after the United States reported its smallest monthly job losses since Feb. 2008 – caught traders off guard.

"Lax monetary policy and low interest rates are common to both the 1970s and the past nine years," reports the WSJ Europe, quoting Harvard professor Jeffrey Frankel.

"I imagine tighter policies will [hurt Gold] this time around," says HSBC analyst James Steel. Higher rates "will be the death knell of the gold rally.

"But there is no sign of this on the horizon yet."

Federal Reserve chairman Ben Bernanke confirmed Monday that "subdued" economic growth will keep US interest rates at zero for an extended period.

Canada's central bank today kept its target interest rate at 0.25% for the eighth month running.

"The herd [in gold] seems to have turned for now," says Phil Smith for Reuters Technical India today, "but mainly as a result of the jump in the value of the Dollar."

"There is very clearly a large and disconcerting 'excess of demand' for work compared to the jobs that are presently available," notes Dennis Gartman of the eponymous investment letter, "with more than 9 million workers saying [in Friday's US data] that they are working part-time because of 'economic reasons'."

Over in Tokyo today, the Japanese government – already owing well over 200% of annual economic output in bonds – announced a new stimulus package worth $81 billion.

Earmarked for first-time buyer home loans, green technologies and consumer subsidies, "This may help the economy somewhat," said Mizuho's chief economist Yasunari Ueno, "but it doesn't even begin to address the more fundamental issues [of] weaknesses in the global economy and deflation."

Here in London, the UK Treasury released full details of the "toxic" assets guaranteed by its Asset Protection Scheme, with the Royal Bank of Scotland receiving £282 billion ($459bn) of tax-funded support.

"Probably the most striking thing is that over half the assets (£167bn) are not in the UK," says the FT's Alpha blog, "with a quarter estimated to come via the disastrous acquisition of ABN Amro."

Lloyds Banking Group today began a newspaper advertising campaign to alert shareholders of its £13.5 billion ($22bn) rights issue, aimed at removing the UK's largest High Street bank from government insurance.

To leave the US Troubled Asset Relief Program, Wells Fargo would need to raise $25bn, the Wall Street Journal reports.

Citigroup would need $20bn, the paper says, diluting existing stockholders by more than 20% at the current valuation – "a pretty tough pill to swallow," according to a New York source.

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