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
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

Commodities

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 MineWeb.com.

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
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 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

© 2005-2022 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