Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

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

Gold Continues to Fall as U.S. Dollar Rises

Commodities / Gold & Silver 2009 Dec 22, 2009 - 07:14 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD slipped to a new 7-week low for US investors early Tuesday, dropping through yesterday's low at $1090 per ounce as world stock markets rose and government bonds fell.

The US Dollar rose for the ninth time in 13 sessions on the forex market, hitting its best level against the "safe haven" Japanese Yen since the start of November.


"There's some speculative demand for gold," said Wolfgang Wrzesniok-Rossbach, sales director at Germany's Heraeus refinery, to Reuters earlier.

"There's also physical demand, not so much in Europe but definitely in Asia."

"The metal [on Monday] broke last week's low of 1095 and the 4-month rising trend line at 1097," says a technical note from bullion bank Scotia Mocatta.

"Next support level comes in at 1070 from our October high."

"It is the weak Euro that is the real story here, not a strong Dollar," writes Steven Barrow, chief currency strategist at Standard Bank.

"On the more likely scenario of further Euro weakness, risky assets could find it hard to shake off the factors that are undermining Euro/Dollar right now."

Showing an average correlation co-efficient with Dollar-Gold prices of +0.51 over the last 10 years, the Eur/USD exchange rate most often moves in the same direction.

Its correlation would stand at +1.0 if gold and the Euro moved together in lockstep against the US currency.

Commenting on the US currency's 5% rally of the last four weeks, "The Dollar had been weak but the other currencies are not much better," said Swiss private-client advisor and Asia-based author Marc Faber to India television on Friday last week.

"The ECB in Europe is also a money printer and the Euro has many problems...So what could happen is that the Dollar is very strong but gold still holds or even goes up if foreign currency holders move some money into gold."

Noting that global central-bank currency reserves have risen 7 times over since 1996, "Gold hasn't gone up 7 times," Faber continued, adding that Asian central banks hold some 70% of today's $7 trillion foreign reserves but keep less than 2% of their reserves in gold.

"I think a lot of central banks will follow the example of the Reserve Bank of India."

The RBI bought 200 tonnes of gold bullion from the International Monetary Fund in late Oct., taking gold as a share of its forex reserves to almost 6%.

"[It] deserves applause," says Faber. "By and large it's a very well-run central bank."

Moscow's finance ministry confirmed yesterday that it's sold 30 tonnes of gold bullion to the Russian central bank, effecting no net change in the nation's bullion holdings but raising the equivalent of $1 billion to reduce Russia's budget deficit.

The finance ministry reckons its 2009 deficit will equal some 7.3% of Russia's gross domestic product.

Russia's central bank has grown its gold reserves by almost two-thirds since former president (and current prime minister) Vladimir Putin said he wanted gold to account for 10% of foreign reserves in late 2005

Yesterday's news takes its hoard above 621 tonnes, knocking Holland into ninth place in the world league of central-bank gold holders and raising gold as a percentage of Moscow's forex reserves to 4.8%.

"I don't think the central bank will [now] be selling it anywhere, although it can dispose of its reserves as it pleases, buy or sell," reckons Alexei Morozov, metals analyst for UBS in Moscow.

Government bond prices meantime fell early Tuesday, pushing the fixed-income yield offered to new buyers of 10-year US, UK and German debt up towards new 2009 highs.

Europe's single Euro currency today dropped from a brief overnight bounce, slipping back towards 15-week lows at $1.4260.

That helped keep the gold price for French, German and Italian investors above €764 an ounce.

The British Pound meantime fell to a 10-week low vs. the Dollar, buoying the gold price in Sterling above a 1-week low at £680.

London's FTSE 100 share index meantime enjoyed a typical "Santa Claus" rally, adding another 1% to near fresh 2009 highs.

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