Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Slip as Dollar Benefits from Greek Uncertainty

Commodities / Gold and Silver 2010 Apr 13, 2010 - 07:28 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE WHOLESALE PRICE of gold and silver bullion both dropped in London on Tuesday, pulling back 2.0% and 3.5% from Monday's early highs as world stock markets fell with crude oil, and the US Dollar rose.


The Greek government took advantage of a sharp drop in its borrowing costs to raise 30% more debt than planned in two auctions of new debt, borrowing €1.56 billion ($2bn) after the weekend announcement of joint IMF and Eurozone aid "if needed".

Greece still faces "significant execution risk" in cutting its huge budget deficit, however, noted Moody's rating agency.

The Euro held more than 1¢ below Monday morning's early peak. The Euro-price of gold turned higher from €845 an ounce, a 3-session low.

"The announcement by Moody's should generate some additional safe-haven buying in gold once this correction is over," says a note from Japanese metal group Mitsui's London office.

"Long-term uncertainty remains in the market," agrees Filippo Finocchi at Italian bullion dealer Italpreziosi today.

"We could still see the Dollar as the primary beneficiary of risk aversion [and] recommend extreme caution in taking positions."

"The latest gains [in gold] on Friday and early Monday morning in Asia were due mainly to technical buying," reckons one Tokyo researcher quoted by Reuters. "Such a rally usually paves the way for a technical correction."

On the political front on Tuesday, "Renminbi appreciation would neither balance Sino-US trade, nor solve the unemployment problem in the United States," said China's president Hu Jintao to US president Barack Obama in Beijing today, according to reports in the Chinese press.

Reform of the currency peg – which locks the Chinese Yuan at 6.8256 per Dollar – will only come to assist China's "economic and social development needs", Hu told Obama.

Twelve out of 19 forex analysts surveyed by Bloomberg News, however, reckon Beijing may allow the Yuan to rise vs. the Dollar before the end of June, so as to curb domestic inflation.

Analysts from Bank of China and the China Construction Bank were amongst 11 of the 19 experts to rule out a one-off revaluation.

The world's No.1 gold mining nation, China is also the world's second-largest consumer market for gold.

With local interest rates now well below zero after inflation so as to maintain the Yuan-Dollar peg, China's ICBC – the world's largest bank by client-base and profits – last week signed a joint-venture agreement with gold-marketing group the World Gold Council.

"We think ongoing concerns over sovereign debt and a possible revaluation of the Chinese Yuan could boost demand for gold," says the latest Metals Matters report from bullion bank Scotia Mocatta.

"While we continue to expect gold prices to move higher this year, higher US real [interest] rates off the back of stronger economic activity will likely reduce some of that upside," says the latest Commodity Watch from investment-bank Goldman Sachs' London and New York analysts.

Goldman Sachs is therefore cutting its 2010 average price forecast to $1165 an ounce, but raising its 2011 target to $1350.

"While we expect gold prices to increase in 2010 and 2011, the rising risk of tightening monetary policy suggests this is a good time for gold producers to begin scaled up hedging of forward production," advises the bank, "particularly for calendar 2011 and beyond."

Government bonds were little changed worldwide early Tuesday as Asian and European stock markets ticked lower from new multi-month highs.

The price of crude oil also slipped after the International Energy Agency said prices above $80 a barrel could threaten global economic recovery.

US aluminum producer Alcoa Inc. kicked off the first-quarter earnings season on Wall Street today by announcing worse-than-expected losses of $201 million.

Silver prices dipped to $18.05 an ounce, down 3.5% from Monday's 12-week high of $18.68.

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.


© 2005-2022 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