Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Slips as Yen Surges on Risk Aversion

Commodities / Gold and Silver 2010 Jun 24, 2010 - 07:57 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD fell again but held above yesterday's 1-week low on Thursday in London, trading 2.2% below last week's finish as world stock markets fell for the third day running.

The Euro held below $1.23 as gold prices slipped and Sterling retreated from an early jump to $1.50.


The Japanese Yen rose to a 5-week high vs. the Dollar.

"Gold is back to trading in line with the Euro," says one London dealer today.

"It will be interesting to see if a return to risk aversion means gold breaks away from this correlation once again."

Silver prices fell 3.4% meantime from Wednesday's peak as crude oil fell through $76 per barrel.

Major economy Treasury bonds rose after new data showed Japan's trade balance, Eurozone industrial orders, and US durable goods orders all coming in weaker than analysts forecast.

In the three years to April, gold's daily movement showed a strong and positive connection with the Euro/Dollar exchange rate of +0.61.

That correlation would read +1.0 if the gold price in Dollars and EUR/USD moved perfectly in lockstep, or –1.0 if they were directly opposed.

Since the start of April, the gold-Euro correlation has collapsed to average –0.25.

"The idea that austerity measures could trigger stagnation is incorrect," writes European Central Bank president Jean-Claude Trichet in an interview with Italy's Repubblica newspaper today, defending the latest round of budget cuts announced by Eurozone governments.

"I don't think that [deflation] risks could materialise."

But "a reduction in the fiscal deficit must be offset by shifts in the private and foreign balances," counters Financial Times economist Martin Wolf, and "the financial sector is impaired...the private sector is highly leveraged [and] interest rates are close to zero."

"It's truly a new Dark Age," agrees Nobel-winning economist Paul Krugman in the NY Times, "in which famous professors are reinventing errors refuted 70 years ago, and calling them insights."

"Europe has been over-zealous in its deficit reduction given that rates are still stuck close to zero and the economic recovery is still fragile," says Steven Barrow, chief currency strategist at Standard Bank today.

"If we are right about this, we feel that the US will be the beneficiary – at least in currency terms – as long as the markets are willing to go on financing the US's fiscal largesse."

A new survey of central-bank and sovereign-wealth managers by Swiss bank UBS says today that half believe the US Dollar will remain the world's No.1 reserve currency by 2035.

In second place – and well ahead of Asian currencies or the Euro – some 22% favor gold as "the most important asset".

Central banks worldwide turned net buyers of gold bullion for the first time in two decades last year.

This week's restatement of Saudi Arabia's gold reserves, plus the collapse of West European sales and ongoing purchases by Russia, puts net central-bank gold buying at almost 223 tonnes for the first six months of 2010 – equal to 12% of total half-yearly demand worldwide on average since 2002.

"Private investors in the United States and Europe, both individuals and institutions, are [also] buying more gold," says gold and precious metals consultant Jeffrey Nichols of American Precious Metals Advisors, "reflecting the same concerns and fears that are driving central banks to accumulate the metal.

"They are increasingly concerned about the huge deficits and debt of governments on both sides of the Atlantic...and that accelerating inflation and depreciating currencies will eat away at their other savings and investments."

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