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
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
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 "Refuses to Fall" as Central Banks Deny Inflation Risk in Low Interest Rates

Commodities / Gold and Silver 2010 Mar 10, 2010 - 08:09 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD continued Tuesday's late rally this morning in London, rising 1.6% from yesterday's 1-month low vs. the Dollar as world stock markets, government bonds and commodities held flat.


A fresh drop in the Pound Sterling – sparked by the worst UK production data since 1991 – pushed the gold price for UK buyers back to £752 an ounce.

Euro gold prices added 1.0% from Tuesday's 7-session low.

"Gold refuses to fall substantially," says Walter de Wet, chief commodities analyst at South Africa's Standard Bank, "but resistance to a move higher is equally great at this stage.

"There is very little due on the macroeconomic front to drive prices today, and the Dollar could dictate direction."

Noting that the "net long" position held by speculative players in US gold futures rose for the third consecutive week on the latest data, the trend in leveraged betting "is once again upwards" says the VM Group consultancy in its Precious Metals Weekly for Fortis Nederlands.

"The general level of optimism concerning gold's prospects" has spread to Tokyo's Tocom futures exchange, the report adds, but "investors there remain cautious."

The gold price in Yen today pushed 2.0% higher from yesterday's dip, more than trebling from 10 years ago when the Bank of Japan first embarked on its zero-rate and quantitative easing program and standing some 6% off late-2009's three-decade highs.

Here in London, "I don't want to be too facetious about it, but if the markets really believed there's a major inflation threat...then you would be seeing interest rates shooting way up and you would be seeing the Pound move a lot more," said Bank of England policy-maker Adam Posen in a TV interview this morning.

Gold has risen by 52% against the Pound in the two years since the Bank began cutting UK interest rates towards their current all-time record low of 0.50%.

The gold price in Sterling has added 16% since a £200 billion program of creating money to buy government debt began this time last year.

"In the medium term, monetary policy must become more restrictive. However, it's too soon for that," said Swiss National Bank vice-chairman Thomas Jordan yesterday.

Thursday's SNB policy decision will leave Switzerland's interest rates at 0.25% and commit the Bank to fresh currency-market intervention – creating Francs to sell against the Euro – according to every analyst surveyed for a Reuters poll today.

Gold priced in Swiss Francs, once considered the world's most stable "safe haven" currency, last week touched new record highs at CHF39,450 per kilo.

That's almost three times the price of May 2000, when the Swiss public voted to cut the Franc's 40% gold bullion backing, enabling Switzerland's central bank to begin selling 1500 tonnes of metal from its reserves.

"Buy gold," said Franco-Nevada chairman Pierre Lassonde in response to a question from MineWeb's Dorothy Kosich at the Prospectors and Developers Association of Canada on Tuesday.

"You may be on the verge of some serious price increase here," said the former president of world No.2 gold mining producer Newmont, as mining companies face problems in controlling costs.

The global economic downturn "has not affected capital costs" as much as miners may have hoped he said, while most large-cap gold mining stocks have barely moved since 2004.

Looking at prospects for future world mine output, "We have been using, more or less, the same technology for the last 100 years," Lassonde added.

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

6 Critical Money Making Rules