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
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

Gold and Silver Near 2010 Highs, Safe Haven Premium Supported by Credit Risks & Rising Liquidity

Commodities / Gold and Silver 2010 Apr 30, 2010 - 08:59 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose to a near 5-month high in Dollars in London on Friday, adding 1.4% from last week's finish as the long May Bank Holiday weekend drew near.

A rally in Asian stock markets faded in Europe, but the Euro jumping back above $1.33 on rumors of a weekend deal for an Athens bail-out.


Gold priced in Euros traded towards a record weekly finish around €28,400 per kilo, some 1.3% below Wednesday's intra-day peak.

US investors wanting to buy gold today saw it move towards the second-best weekly finish ever, rising above $1175 an ounce.

Silver prices jumped within 20¢ of their 2010 highs, rising 2.0% from last Friday's close to $18.74 an ounce.

"Events in Europe have refocused investors' attention on the value of gold as a hedge versus currency debasement," notes the Natixis bank research team led by Patrick Artus in Paris, "with the gold price denominated in Euros rising to new highs this week as the Greek debt crisis intensified."

But noting the recent interest-rate hikes by China, India and Brazil, however, "If the negative cost of carry on leveraged gold positions was to rise, so the gold market contango would be expected to steepen," says Artus, "to the detriment of spot prices."

On the contrary, says Walter de Wet at Standard Bank in London, gold is enjoying "a safe haven premium."

"Unlike crude oil," de Wet writes, "gold has been consistently trading at higher levels for the same Euro/Dollar exchange rate since 2007." This means "there are other factors inflating the gold price" besides the US currency, in which both oil and gold are usually priced for convenience.

"These factors, we believe, are predominantly credit risk...global liquidity and ease of storage. We expect credit risk to remain elevated for most of 2010. We also expect liquidity to continue to grow this year.

"Therefore we expect support for gold to remain largely in place."

Crude oil today rose above $86 per barrel, some 40% below its all-time top of July 2008.

New data released in Tokyo meantime showed Japanese consumer prices falling further in March, the 13th consecutive month of deflation.

Spanish unemployment rose above 20% for the first time in more than 10 years.

US economic growth for Jan. to March was pegged by the BEA at 3.2% annualized, recovering one-third of 2009's full-year drop in Dollar terms.

Disposable personal incomes were flat. Personal consumption rose 3.6%.

Swiss shareholders meeting in Zurich blocked Credit Suisse's proposed pay and bonus packages. European regulators said they are bringing "high-frequency trading" by investment banks into their review of the Market Abuse Directive.

The US Justice Department said it's begun a criminal investigation into Goldman Sachs' mortgage-bond derivatives deals.

"You have a lot of investors who are still very bullish on gold but they're a little hesitant to buy at what really are elevated prices," says Jeffrey Christian, head of New York's CPM Group consultancy, speaking on Thursday to South Africa's MineWeb.

"On the other side of the table you have a lot of investors who had been driven by shorter-term economic factors – recession, a credit freeze, the stock market...

"Now we're coming out of that...there is reduced need for gold as an asset, as a portfolio hedge in the minds of those people who have been investing on a shorter-term basis."

Greek politicians on Thursday agreed new "austerity" measures to try and cut the government's budget deficit by 10 percentage points of GDP by end-2011.

"There isn't much room for maneuver. This is about saving the country from collapse," the FT quotes Andreas Loverdos, Athens' social affairs minister.

So far, of the 3-year package of aid now set at €120 billion, Cyprus has approved €60m, Belgium has drafted a law to lend €1bn, and German politicians are set to discuss an $8.4bn contribution next week.

There is no word as yet from France, Italy or Spain on their commitment to the proposed bail-out.

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