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
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Long-term Bull Market Means Buy the Dips

Commodities / Gold & Silver 2009 Dec 11, 2009 - 08:08 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD ticked higher in Asia and early London trade Friday, heading towards the weekend at $1140 an ounce – some 3.4% below the record weekly finish of a fortnight ago – as world stock markets crept towards new 14-month highs.

The "safe haven" Dollar and Yen both eased back on the currency markets, but the British Pound failed to benefit, taking the gold price in Sterling back up to £700 an ounce.


By lunchtime in Frankfurt, gold priced in Euros had recovered one-fifth of the last seven days' 6.5% loss from the intra-day peak above €812 an ounce.

Short-term, "Only a close back above former channel top at $1151 will remove the downside bias," says one bullion bank analysis today.

"After seeing large scale liquidation on consecutive Fridays we could still be in for some excitement today," says another.

But "the dip-buying we've been seeing will likely continue until the end of the year, reckons Steven Zhu at the Tonglian Futures Co. in Shanghai, speaking to Bloomberg.

"Investment demand for gold should recover after profit-taking and book-squaring dries up," agrees VTB Capital analyst Andrey Kryuchenkov, predicting a re-test of $1200 at the start of 2010.

Crude oil rallied today above $71 per barrel after Chinese trade data showed the fastest jump in energy imports since 2004, with refinery output rising by more than one-fifth.

China's export sales cut their year-on-year decline to 1.2%. Price inflation returned for the first time in nine month, adding 0.6%.

Government bonds meantime extended Thursday's sharp drop, with the yield offered by 10-year US Treasuries rising to a one-month high as prices slipped.

Ukraine's government appealed to the International Monetary Fund for $2 billion in emergency funds amid "an extremely difficult situation" with its finances.

"I don't think [gold] is really in a bubble right now," says Michael Widmer, metals strategist for Bank of America-Merrill Lynch.

"If you look at what drove some of the buying, we do still see a lot of reserve diversification from central banks [which] by definition means they're not necessarily buying into gold markets because they expect huge price rises.

"They buy gold because it's good diversification."

"When you say it's a bubble...nobody owns gold yet," said commodities' fund manager Jim Rogers to CNBC Maria Bartiromo late Thursday, citing a straw poll of 300 money managers at a recent speech he made in Prague.

Some 76% said they had never owned gold, Rogers said.

Currently backing a short-term bounce in the US Dollar – simply because "Everyone is so pessimistic, including me!" – Rogers said that "Paper money throughout the world is being printed right now...

"We may have to wind up with all of our money in commodities because there's no paper money that we can trust."

Today the FistfulOfEuros blog notes that the 2009 government deficits of both Spain and Greece – put on "negative watch" and downgraded respectively by the ratings agencies this week – have been funded with European Central Bank cash initially lent to their commercial banks amid last year's financial crisis.

"The UK and the US are classified as 'resilient' rather than 'resistant'," said the Moody's rating agency in a statement, commenting on the threat to triple-A status. Moody's classes resilience below resistance, noting today that "the rise in [UK and US] debt and higher interest costs could test the ratings...but not right away."

London's Institute for Fiscal Studies (IFS) said on Thursday that UK state debt will persist at 80% of annual GDP for "at least" the next 30 years if pension obligations aren't reduced or funded.

The unfunded liability for UK public-sector and statutory pensions now totals more than £2.2 trillion ($3.5bn) according to data from the Office for National Statistics and Government Actuary Department – more than twice the outstanding government debt.

Forecasting gold will reach "a couple of thousand dollars an ounce" within the next decade, "That's not a very radical assumption," Jim Rogers told CNBC yesterday. "It's only five or six per cent a year from here."

Gold prices have averaged 16% annual gains vs. the Dollar since 2000.

"The idea that paper currency is a poor store of value is just beginning to build up a head of steam among top investment thinkers and has not filtered down into public behavior," writes John Hathaway of Tocqueville Asset Management, the $7.6 billion New York fund.

"Warnings of a bubble in gold are coming from the same quarters that failed to spot the...financial excesses of internet [stocks], housing, leverage [and] hedge funds. We welcome the skepticism."

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