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
Stock Markets Failing to Give Another AI Mega-trend Buying Opportunity - 6th Jun 20
Is the Stock Bulls' Cup Half-Full or Half-Empty? - 6th Jun 20
Is America Headed for a Post-Apocalyptic Currency Collapse? - 6th Jun 20
Potential Highs and Lows For Gold In 2020 - 5th Jun 20
Tying Gold Miners and USD Signals for What Comes Next - 5th Jun 20
Rigged Markets - Central Bank Hypnosis - 5th Jun 20
Gold’s role in the Greater Depression of 2020 - 5th Jun 20
UK Coronavirus Catastrophe Trend Analysis Video - 5th Jun 20
Why Land Rover Discovery Sport SAT NAV is Crap, Use Google Maps Instead - 5th Jun 20
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold Rally Stlls But Investment Demand Remains Strong

Commodities / Gold and Silver 2010 Aug 18, 2010 - 08:32 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD held in a tight range around $1225 an ounce early in London on Wednesday, little changed by a drop in commodity prices and the first fall for a week in European equities.

Government bond prices rose, pushing 30-year German Bund yields down to a record low of 2.97%.



The Japanese Yen rose back towards ¥85 per Dollar – nearing a 15-year high – as Tokyo policy-makers prepared to discuss intervening in a meeting on Friday.

"We view liquidity and low real interest rates as the fundamental drivers of gold investment demand," says today's report from Walter de Wet and his team at Standard Bank.

"Even if risk appetite improves, gold should rise."

Over in the currency markets today, the British Pound jumped 1.5¢ – recovering all of Tuesday's loss – after minutes from the Bank of England's latest interest-rate meeting showed policy-makers noting that "UK inflation has been above target in all bar nine of the past 50 months."

The gold price in Sterling fell back to last week's finish at £780 an ounce, more than 5% above late-July's four-month low, but 10% below June's record peak.

Today's minutes showed that the committee still voted 8-to-1, however, to keep base rate at its historic low of 0.5% – some 2.6% below Tuesday's official reading of UK inflation – and maintain the Bank of England's current £200 billion of quantitative easing.

"The European Central Bank must make its actions [similarly] transparent, at least retroactively," said German coalition partner Frank Schaeffler, head of the Free Democratic Party, in a newspaper interview yesterday.

The ECB has "crossed the Rubicon" by buying government debt from the ailing "olive states", Schaeffler believes.

"The ECB's [political] independence is not carte blanche for breaking the law."

Meantime in the United States, "Why isn't the Fed acting more aggressively?" asks a blog at The Economist today, dismissing the answer given in a speech yesterday by Minneapolis Fed president Narayana Kocherlakota, that "Most of the existing unemployment represents a [structural] mismatch that is not readily amenable to monetary policy.

"Firms have jobs, but can't find appropriate workers," claimed Kocherlakota, who becomes a voting Fed policymaker next year. "The workers want to work, but can't find appropriate jobs."

The Euro meantime failed for the sixth session running on Wednesday to break above $1.29 to the Dollar, a level first reached in late 2004.

Formerly showing a strong connection with the gold price in Dollars, the Euro/Dollar exchange rate ended Tuesday with a correlation to gold of minus 0.23.

That figure would read +1.0 if gold and the Euro moved in lockstep together against the US currency, or minus 1.0 if they moved in absolute opposition – a perfectly negative correlation very nearly achieved for the first time ever at the height of the Greek debt crisis in mid-May.

From the Euro's launch a decade ago to end-2009, the single currency averaged a strongly positive correlation with the gold price of +0.52 (rolling one-month correlation, daily changes.

So far in 2010, that average has sunk to a statistically insignificant minus 0.02.

"Gold's upside breach [this week] has re-established some upside momentum," says the latest technical analysis from Scotia Mocatta.

"$1250 remains a logical short-term target."

But "Gold it finding some resistance at the old December 2009 high," counters Phil Smith at Reuters Technical in Beijing, "[where] we could still be forming another top.

"Volume has been tailing off," Smith repeats, "which is consistent with such a pattern."

"Volumes seen this week have been increasingly thin," agrees a London dealer, "and are making it more difficult to believe that gold's run from $1157 to $1229 can be sustained."

"I would say there's still light buying from India" after last month's bargain-hunting below $1200, says a Hong Kong dealer quoted by Reuters. "There's a bit of selling of scrap after the price hits a new high."

Typically quiet during the summer and harvesting months, gold demand from Indian consumers – the world's No.1 buyers – is due to return with the autumn festival and wedding seasons, culminating in early November.

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