Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Rally Triggers Buy Stops as Crude Oil Leads Commodities Surge

Commodities / Gold and Silver 2010 Jan 05, 2010 - 08:09 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD eased back from its strongest Dollar and Euro prices in nearly three weeks in London on Tuesday, holding above a one-month high of £700 per ounce for UK investors as European shares and US stock futures held flat.

The CRB commodities index rose almost 2% as sugar neared a three-decade high and US crude oil contracts touched $82 per barrel – more than twice the price of 12 months ago.

Consumer price inflation in the 16-nation Eurozone leapt in Dec. to a 10-month high, the Eurostat agency said Tuesday morning, unwinding the last of 2009's second-half deflation.

"Buy stops were triggered" as gold rose late in Asia says a Hong Kong dealer today, with professional traders re-entering the gold market after last month's 12% drop.

"The Dollar remains the key driver," says an analyst's note. "All commodities have benefited from an increase in risk appetite."

But "Buying interest in the physical market seems to have faded on gold's [1.8%] rally yesterday," says Standard Bank's daily commodity briefing.

"We need to see much more Dollar weakness on a trade-weighted basis to sustain a rally in gold." (Is gold's 10-year run all about the Dollar? Read Dollar Nonsense here...)

Monday saw the 1128-tonne SPDR Gold trust shed five tonnes of the gold backing its exchange-traded shares, the first such drop in almost a month but only equal to the annual 0.4% expense ratio it charges stock-holders.

Long-dated government bonds fell Tuesday morning, pushing 30-year US Treasury yields up to 4.75% ahead of Pending US Home Sales data and Vehicle Sales figures for Dec.

Latest data from US regulator the Commodity Futures Trading Commission showed speculative, non-industry gold traders cutting their "net long" position in Comex derivatives in the last week of 2009, down 2.5% to the equivalent to 913 tonnes.

The "net short" belonging to commercial traders hedging their inventories also fell to a three-month low, but in aggregate, these miners, refiners and wholesalers continued to hold 3 bearish contracts for every 1 bullish bet.

The commercial traders' "bull ratio" peaked at 42% of their directional bets as Dollar gold prices slumped in the fall of 2008.

"The fact that speculative long positions have recently been at all-time highs is a further illustration of the interest in the [precious metals] market," writes Rhona O'Connell of the GFMS consultancy at

Reviewing 2009, O'Connell says cumulative investment flows into the world's major gold ETF trust funds – led by the SPDR – "netted out" at $16.9 billion last year.

Bond funds meantime saw global inflows of $158bn according to analysts EPFR. Emerging-market equity funds received $64.5bn.

Latest data from the London Bullion Market Association (LBMA) meantime show daily turnover in the professional wholesale market hitting a 6-month high in November, with the value of wholesale dealing (both in physical and also in "unallocated" credit accounts) rising to its strongest level since Jan. 2008.

According to international money market (IMM) data, speculative traders continued to hold a "long Dollar" position in their forex accounts last week, reversing the strongly bearish position taken through to early December.

The International Monetary Fund's new 2010 Outlook meanwhile forecast strong gains in commodity prices – already up 24% in 2009 – as "industrialization continues in emerging and developing economies.

"Accommodating this demand will eventually require further capacity expansion in many commodity sectors, with some need to tap higher-cost sources," says IMF researcher Thomas Helbling.

"Demand is expected to continue rising at a solid pace."

By Adrian Ash

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 , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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 - 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