Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20
Is The Coronavirus bullish for Stocks? - 8th Feb 20
Ryzen 9 3950X Best UK Custom PC Builder 2020 - vs - 8th Feb 20
Warwick University Offer Holders Open Days 2020 - Visitors Car Park 15 Parking - 8th Feb 20
The Historical Impact of Recessions on Gambling Activity - 8th Feb 20
UK Points-Based Immigration and Its Effect on the Job Market - 8th Feb 20
British Pound GBP Long-term Trend Analysis - 7th Feb 20
The Case for Buying Precious Metals - 7th Feb 20
Vacuum Cleaner Features You Need To Know - 7th Feb 20
How to Shrink Financial Market "Maybes" Down to a Minimum - 7th Feb 20
Stock Market Broad Sector Rotation Starts In 60+ Days – Part I - 7th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Demand Swells at Record-High Prices as USD-Price Reverts to Moving with Euro

Commodities / Gold and Silver 2010 Sep 20, 2010 - 08:21 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD in US Dollars edged up to fresh record highs above $1283 at the start of London trading on Monday, while silver re-visited last week's 30-year highs above $21 per ounce.

World stock markets also rose sharply, as US crude oil futures recovered to $73 per barrel.

Major government bonds slipped, nudging yields higher, but Irish and Portuguese spreads over German Bund yields rose to fresh post-Euro highs.

"Friday's disappointing US data flow gave the gold bulls another reason to buy," notes Leon Westgate at South Africa's Standard Bank today.

"A weaker Dollar has added to gold's upward momentum this morning."

Trading around €31,500 per kilo for Euro investors today, gold stood unchanged from mid-August, despite the 3.5% rise in Dollar prices.

Priced against the US currency, in fact, gold ended Friday showing its strongest connection with the Euro since the start of July, displaying a daily correlation right in line with its 10-year average at +0.47.

Previously in 2010, in contrast, gold had averaged almost perfect non-correlation with the Euro, displaying a co-efficient of –0.06.

That figure would read +1.00 if they moved perfectly in lock-step together against the Dollar. It would stand at –1.00 if they were utterly opposed.

Gold's correlation with the Euro hit a record low of –0.88 in May this year. It has not reached +0.90 since Feb.

"Gold [in Dollars] registered a strong up week," notes the latest technical analysis from bullion bank Scotia Mocatta.

"The break of previous record high of $1265 opens up a new topside target of $1369," says Russell Browne, spying the start of Wave 5 in an Elliott Wave pattern.

Over in Asia today – where the Thai government became the latest central bank to announce larger gold bullion holdings on Friday – "Volumes were quieter" following last week's late flurry, says one Hong Kong dealer today.

Japanese traders were on holiday today to mark Respect for the Aged Day. "Besides sporadic Chinese buying, [gold deals] went through electronic trading."

In New York, the volume of gold bullion needed to back the SPDR Gold Trust – the world's largest gold ETF – also jumped late last week, undoing two weeks of declines to swell above 1300 tonnes.

New data released by US regulator the CFTC late Friday showed the "net long" position held by speculative traders and private investors in gold futures and options last week exceeded 1,000 tonnes equivalent for only the 7th time ever.

Rising 1.5% from the previous Tuesday's position, the "net long" remained 2% below the record level of Dec. 2009, however, while the total "open interest" in all gold futures and options rose at its fastest pace in a month, swelling by almost 3% to stand above 822,000 contracts – just 1.6% off its record peak of May this year and larger by nearly two-thirds from its five-year average.

Meantime in the bond market, and after Barclays Capital was blamed for Friday's slump in Irish bond prices – warning that the International Monetary Fund may still have to rescue Dublin "in the medium term", spurring the European Central Bank to buy Irish debt in the open market – the three big ratings agencies today ranked Europe's own stabilization program "AAA" in a flurry of announcements.

Moody's, Fitch and Standard & Poor's all gave the new European Financial Stability Facility their top rating, meaning its bonds – issued to finance the purchase of weaker European government bonds – can be held by pension and insurance funds worldwide.

Both Irish and Portuguese bond prices continued to fall, however, versus comparable German debt, driving their 10-year yield spreads to new record highs.

"Both governments are [also] paying yields well over the 5% that would be offered by the EFSF," notes the FT's Alpha blog.

"Ireland is expected to post a [budget] deficit of 25% of GDP this year, when bank losses are added," says – "the largest in Europe."

Ireland goes to market tomorrow with an auction of four- and eight-year government bonds.

Tuesday also brings the latest US Federal Reserve decision on Dollar interest rates.

By Adrian Ash

Gold price chart, no delay   |   Buy gold online at live prices

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 , 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 - 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