Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Fresh Stock Market Losses Outpace Gold; Bond Yields Slide

Stock-Markets / Credit Crunch Aug 15, 2007 - 12:16 PM GMT

By: Adrian_Ash

Stock-Markets

SPOT GOLD PRICES slipped $5 per ounce to $664 by lunchtime in London on Wednesday, losing 0.7% from Tuesday's US close. Global stock markets, meantime, fell a further 0.9% according to the MSCI index.  

"Gold holds its own in credit crunch," reports today's Fortis Metals Monthly report. Looking ahead, and "given the background noise of rising central bank sales the metal did well to stay above $650/oz [but] it might have trouble staying there as gold mining companies. dehedging slows for the remainder of the year."  


For now, "the indications for gold are not positive today," reckon Dresdner Kleinwort analysts in a note. "US economic data released today might increase the worries about the fall-out of the sub-prime mortgage crisis."  

Following the surprise jump in July's US input prices reported yesterday, today brings US consumer price data at 08:30 EST. Forecast at 0.2% for the month - unchanged from the previous reading - it will be accompanied by data showing Net Foreign Purchases of US securities during June. Wall Street consensus is for just half of May's shock total of $126 billion.  

"Risk aversion does not appear to be helping gold at present," say analysts at BNP Paribas in their latest quarterly review. "Gold seems to be suffering whenever world financial markets fret about a Chinese equity meltdown or a US sub-prime mortgage collapse."  

But spot gold prices, whilst 4% down from April's high against the Dollar, still record a 4% rise from the start of this year. Versus the other major currencies, indeed, gold has continued to rise throughout the current stock market turmoil.   The Morning Fix in London on Wednesday priced gold against British Pounds at £334.42 per ounce, the highest level since June 7th. Priced against the European single currency, gold recorded an AM Fix of €492.84, the highest price for French and German investors wanting to buy gold today in nearly three weeks.  

Meantime in the bond market - where the inflation fears of early summer have quickly switched to expectations of lower central-bank interest rates ahead - prices of government debt also continue to rise.

Two-year US Treasury bond prices today hit an 18-month high, pushing yields down to just 4.33%. The yield on 10-year US Treasuries slipped one point to 4.71%, down from 5.32% barely two months ago.  

According to Bloomberg data, interest-rate markets now see an 88% chance that the Fed will cut US rates to 5.0% at its Sept. meeting. The likelihood of a further cut by December has doubled to nearly one-in-two.  

With output prices from China expected to rise following the 10-year high in consumer price inflation reporting on Monday, the confluence of lower bond yields and rising living expenses could well trigger a long-term allocation to gold by investors squeezed in the middle.  

Short term, "gold is down because of the strengthening Dollar," says Wolfgang Wrzesniok-Rossbach at Heraeus, the German refining business.

"Metals are hit because of declines in the equity markets," adds an analyst at Standard Chartered Bank. Citing the sharp declines in base metal prices including aluminum, copper, nickel and zinc, he says "there has been no drastic fundamental change in metals themselves."  

Industrial metals have a very correlation with global equity prices, and despite Tuesday's fresh injection of €47.7 billion by the European Central Bank into the short-term money market, the FTSE Eurofirst 300 index closed 1.2% lighter. By lunchtime in Frankfurt it stood a further 0.7% down.  

The S&P on Wall Street closed last night 1.8% lower. The Nikkei dropped 2.2% by the close in Tokyo in today. Here in London , the FTSE100 has now dropped nearly 700 points - well over the commonly-cited 10% slump deemed to mark a “correction” - inside one month.  

Crude oil prices, meantime, rose again early Wednesday, as Tropical Storm Dean moved into the Caribbean and another storm brewing in the Gulf of Mexico headed for US refineries and oil fields.   "We have a big hurricane factor now," says Michael Davies, a commodity analyst at Sucden UK .

"We could have some very sharp price spikes in oil."

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , 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 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