Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Slips as Beijing Denies Hoarding, Notes Huge Private Chinese Demand

Commodities / Gold and Silver 2010 Mar 09, 2010 - 07:59 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE of wholesale gold bullion slipped to a one-week low early in London trading on Tuesday, falling to $1116 an ounce as the US Dollar rose on the currency market.

Asian stocks closed the day flat overall. European bourses lost 0.5%.


Crude oil dropped almost $1.50, slipping towards $80 per barrel, while government bonds rose, pushing yields down to a near 4-week low.

"Gold's still trading above the 50-and 100-day moving average," said senior ANZ analyst Mark Pervan in Melbourne to Reuters earlier, "which is encouraging."

"[Monday's] close below $1131 takes some of the life out of our bull run," says the latest technical analysis from Scotia Mocatta, but the bullion bank remains "bullish" with prices $1110 an ounce – "the rising trend line off gold's previous lows of 1045 and 1088."

Over in the Physical Gold market, "News is mixed" reports Wolfgang Wrzesniok-Rossbach at German refining group Heraeus, noting an increase in scrap gold supplied through Hong Kong as well as lackluster demand from the jewelry industry since mid-Feb.'s Chinese New Year.

Responding to New York University economist Nouriel Roubini – who forecast last weekend that a "super cautious...token" rise of 4% will be allowed in the Chinese Yuan's US-Dollar exchange during 2010 – Heraeus' head of sales adds that "Increasing discussion of revaluation [has] played a subordinated role in this context so far."

But "Should it come to such an appreciation of the Yuan, gold would initially become cheaper locally [in China, and thus] drive up demand again."

Private Chinese households hold "much more than 3,000 tonnes of gold," guessed Yi Gang, deputy governor of the People's Bank of China and administrator of the State Administration of Foreign Exchange (SAFE), at a press conference today.

Telling reporters at the People's National Congress that China's $2.4 trillion in state-held foreign currency reserves are "appropriately diversified" – and vowing to keep the Yuan's exchange rate "basically stable" – Yi said that "The size of the gold market is limited. So China's [official] purchases of gold in the global market would push up global prices.

"China's domestic gold prices are related to global prices, so Chinese consumers will face higher prices and they won't like it."

Widely thought to prefer buying gold direct from domestic mine output – the largest in the world last year, overtaking the US, South Africa and Australia – the People's Bank reported an additional 400 tonnes in its gold reserves for 2003-2009.

Private Chinese households bought more than four times as much gold over that period, as BullionVault analysis shows.

"The long-term return on gold investment is not good," Yi went on at Tuesday's press conference. "It is increasingly volatile...and we will be very cautious in considering suggestions that we increase our gold reserves."

More than doubling in the four years to Dec. 2009, the gold price in Chinese Yuan has so far this week slipped in lock-step with the 1.7% drop in Dollar prices.

The Yuan has been pegged at a fixed exchange rate of CNY6.82 per Dollar for the last 20 months.

"With the retirement of Fed vice-chairman Donald Kohn," notes Martin Hutchinson at Prudent Bear, "President Obama now has the right to appoint three Fed governors," giving "soft-money advocates" the lion's share of Fed policy votes.

"The throttle will have been jammed open until at least January 2013 [...and] the current commodities bubble will have full rein for another three years," says Hutchinson.

"If no crash occurs, we will have gold at $5000, oil at $200 and other commodities at correspondingly nose-bleed prices."

Noting that the "transmission mechanism" of the Bank of England's quantitative easing program has been to push £200 billion of newly created money into "riskier" assets, "As yet, I don't consider the evidence suggests that this [current] rise in asset prices has gone too far," said career academic Kate Barker – shortly to stand down after 9 years voting on UK interest-rate policy – in a speech last night.

However, "I seriously underestimated the scale of the downside risks from a potential financial crisis" ahead of the 2007-2009 financial crisis, she added.

"With the benefit of hindsight...it is possible that it would have been preferable to have taken a more long-term view of the risks to inflation from economic instability."

The gold price in both Sterling and Euros today held 1% below yesterday's start by lunchtime in London, supported by a fresh drop in both currencies vs. the Dollar.

The UK's trade deficit leapt to a 16-month record in Jan., new data showed, despite the near-30% devaluation of Sterling since the global financial crisis picked up pace with the collapse of over-geared mortgage lender Northern Rock in Sept. 2007.

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.


© 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