Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

International Monetary Policy Favors Gold as Interest Rates Remain Near Zero

Commodities / Gold and Silver 2010 Mar 05, 2010 - 06:37 AM GMT

By: GoldCore

Commodities

Best Financial Markets Analysis ArticleGold was unchanged in London before dipping to $1,126/oz in New York, it then recovered to close down 0.92% at $1,131/oz. It has had a $4 trading range in Asian trading this morning. Gold is currently trading at $1,135/oz and in Euro and GBP terms, gold is trading at €835/oz and £755/oz respectively. Gold remains near record nominal highs in euros and sterling and appears to be consolidating near these record price levels.


Gold should remain well supported with interest rates remaining close to zero. The European Central Bank and the Bank of England kept their interest rates at record lows yesterday – keeping them on hold at 1 percent and 0.5 percent. With the Federal Reserve having interest rates near zero as well, the “opportunity cost” to own non yielding gold remains favourable. One does not sacrifice yield in owning gold versus Treasury bills. T-bills, government bonds and cash are paying little or no interest, so it remains prudent to have an allocation to gold as it is a currency that cannot be devalued by governments or central banks.

Monetary policy looks set to favour gold for the foreseeable future and interest rates will have to return to their long term average or higher in order to incentivise savers again. It is very important to remember that gold only peaked in value towards the end of the Federal Reserve’s interest rate tightening in the 1970’s. Gold is over the long term correlated with interest rates meaning that gold tends to rise when interest rates rise and fall when interest rates fall. While this was not seen in recent years, it was clearly seen between 1971 and 2000. Gold rose sharply in value in the inflationary and rising interest environment of the 1970’s and then in the disinflationary, falling interest rate environment of the 1980’s and 1990’s, gold fell in value.

Continuing record low interest rates and the significant macroeconomic and currency risk seen today should lead to gold remaining firm in all currencies.

Gold Technicals
There appears to be a trend for higher gold prices forming again as seen in the break out of gold in euros and sterling to new record highs this week. As usual, the breakout above previous resistance at previous record nominal highs after a period of correction and consolidation could signify a rally in the coming months in these currencies but also in the dollar.

Gold's rise of $70 per ounce and nearly 7% in the last month from lows at $1,060/oz (February 8th) to over $1,130/oz could signify the end of the recent correction. Especially as it has coincided with a period of strength for the dollar versus the euro and sterling.

Gold could again rise to its recent record high of the 3rd of December at $1226.44/oz especially if resistance at $1,160/oz is broken. A weekly close above the previous record high would set up to challenge $1,300/oz in the short term and longer term (4 to 5 years) the inflation adjusted high from 1980 of $2,300/oz remains a possible price target. However, gold would have to sustain the gains of the last 4 weeks and stay above support above $1,100/oz for a challenge at the $1,300/oz level to come in the short term.

( Related Article - Bloomberg: Gold May Rise Back to Record, GoldCore Says: Technical Analysis - http://www.bloomberg.com/apps/news?pid=20601110&sid=arLW6nrlLolo )

SILVER
Silver has range traded from $17.14/oz to $17.26/oz in Asia. Silver is currently trading at $17.23/oz, €12.67/oz and £11.46/oz.

PGM’s
Platinum is trading at $1,580/oz and palladium is currently trading at $468/oz. While rhodium is at $2,575/oz.

NEWS
- Oil prices remained firm in Asian and early European trade today on bargain buying contributing to gold’s recent strength. New York's main contract, light sweet crude for delivery in April, gained 47 cents to $80.68 a barrel. London's Brent North Sea crude for April was up 54 cents to $79.08. The market awaits the key US jobs report to be released later today for indications of the pace of economic recovery in the world's biggest economy and largest energy consumer.

- China's Wen Jiabao said, in his annual ‘state of the nation’ address that the economic turnaround is not yet a fundamental improvement. He said that China must share the fruits of its economic miracle more evenly between rich and poor as it seeks an orderly exit from last year’s massive £400bn stimulus package. Mr Wen said that after leading the world out of the global financial crisis China now faced a “crucial year” in which it must curb inflation and lay the foundations for stronger internal consumer demand. “This is a crucial year for continuing to deal with the global financial crisis," Mr Wen said "We still face a very complex situation."

- France's unemployment rate jumped to 10%, the highest in a decade a figure likely to influence voters ahead of regional elections, latest figures have shown. Unemployment has been climbing for seven quarters, since the economy dipped into recession in 2008, but the leap announced on Thursday was especially high, from 9.5% in the third quarter and shows that the economic problems in the Eurozone are not confined to the so called PIIGS.

This update can be found on the GoldCore blog here.

Mark O'Byrne

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore 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