Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
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
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19

Market Oracle FREE Newsletter

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

Daily London Gold Market Report - Chinese Inflation Data Bullish for Gold

Commodities / Gold & Silver Aug 13, 2007 - 01:01 PM GMT

By: Adrian_Ash


SPOT GOLD PRICES slipped against the US Dollar early Monday, opening the week in London just shy of last week's start around $671 per ounce as global equity markets rose in response to fresh injections of cash from the world's leading central banks.

"Despite the recent sell off in gold from fund managers attempting to raise capital to cover margin calls on loss making positions in their portfolios, the yellow metal should bounce back and react positively given the amount of cash being fed into the global markets," says today's note from Standard Bank.

The Bank of Japan today put another ¥600 billion into Tokyo 's money market, helping the Nikkei stock index to end the day 0.2% higher. The broader Topix index, however, slipped to a new 8-month low as banking stocks fell further and economic growth was reported at just 0.5% annualized between April and June, way below the first quarter's 3.2% rate.

The injection of Yen came as the lack of willing lenders worldwide pushed Tokyo 's overnight call rate above the Bank of Japan's current 0.5% target. In Frankfurt this morning, the European Central Bank then injected €47.67bn into the Eurozone money markets, its third special operation since Thursday, offering "quick tender" on cash lent at 4.06%, just above its current target rate.

In the stock market, the FTSE Eurofirst 300 index leapt 1.3% higher in the first half of trading, and Wall Street futures turned higher. Professional investors now await the first official comments on the global liquidity crunch from monetary policymakers, and will watch to see if the US central bank adds to Friday's injection of $38 billion into the US money market. The Federal Reserve has already pledged further funds "as necessary".

"People are more interested in gold in case the Fed does something more dramatic if the market does deteriorate a little bit more," reckons Caesar Bryan, a manager at GAMCO Gold Fund in New York. Noting the metal's $17 leap in response to Friday's cash injection by the Fed, "gold should do well" he believes.

"Gold was further aided on Friday by market rumors that the Fed will convene at an emergency meeting, possibly as early as this week, to discuss the possibility of reducing interest rates from 5.25% to 4.75% next month," says the note from Standard Bank.

"Should this happen it would be a fair bet that other central banks such as the Bank of England and ECB would follow suit and ease monetary policy to give the markets time to recover."

In the gold market itself, "the general public on [ Japan 's] Tocom were good sellers overnight," reports the London note from Mitsui today, "capping any attempt at a rally in gold. The $676.50 level has been providing good resistance to the market. However, with the Indian demand season a few days away, and the Middle East returning from their holidays, look for dips in the Gold price to be supported."

Physical demand for jewelry manufacture is set to pick up by the start of Sept. as the Hindu festival and Indian wedding seasons return to India . Meantime, "since physical demand is still weak in August, we might see gold trailing other markets such as equities," says Ma Qianyu, a gold trader at Bank of China in Shanghai , to Bloomberg.

In the currency markets, the Euro continued to slip versus the Dollar, taking the cross below $1.3650. Down nearly 1.4% from this time last week, the falling currency helped the Euro price of gold recover Friday's close above €491 per ounce just ahead of the US open.

The British Pound also continued its decline against the Dollar, dropping below $2.0100 for the first time in five weeks on news that input prices for UK manufacturers rose only 0.1% annualized in July, down from June's 2.3% rate. That took the Sterling price of gold more than £1 higher for the session to break £333.50 per ounce.

Inflation data from China , however, suggests further price pressure ahead. Hitting a ten-year high of 5.6% last month, China 's domestic inflation "is the result of faster growth above capacity and vast liquidity inflows," reckons Stephen Green of Standard Chartered Bank in Shanghai . Given the current liquidity crisis in global financial markets, the threat of fresh interest-rate increases and monetary tightening in China may help create a genuine slowdown in the real economy.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2007

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