Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Fresh Stock Market Losses Outpace Gold; Bond Yields Slide

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

By: Adrian_Ash


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

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