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
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Falls vs. the Dollar, But Holds Steady in Euros; Hits New 23-Year High for Japanese Buyers

Commodities / Gold & Silver Oct 08, 2007 - 08:06 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES fell in early trade on Monday, slipping 0.5% in Asia and then dropping further to bounce off $736.50 twice in London this morning. That level also marked the AM Fix in London , recording a loss of more than $9 per ounce from last week's start.


The early drop cut only 0.85% off the Gold Price in British Pounds , however, as the Dollar rallied on the forex market. The Gold Price in Euros was barely changed.

"Gold-favorable factors continue to be in place," writes G. Chandrashekhar for the Hindu Business Line in Mumbai, "such as high crude prices, geopolitical concerns and strong physical demand.

"Under the circumstances, and notwithstanding short-term corrections, the yellow metal will perform well through the last quarter."

But according to technical analysts, says Chandrashekhar, "there is risk of a correction to $700-710. A close below $722 in the Gold Market would confirm that a deeper correction has begun.

"The bigger picture still points to a run towards $800," he adds. "Strategic buying at every fall may be a good idea."

Outside Japan – where trading was closed on Monday for the national Sports & Fitness holiday – Asian stock markets hit a new record high overnight. The Sydney stock index added 0.7% for the day, despite a report that hiring in Australia's mortgage and retail banking sectors dropped by more than one-tenth in Sept.

Wall Street will open as usual later today, but trading is set be light during today's Columbus Day holiday after last week's new all-time highs on the Dow.

Alcoa Inc – the world's largest aluminum producer – will report its latest results after tomorrow night's close, the first company in the Dow Jones Industrial Average to give its third quarter numbers. Other big names to follow include Monsanto, the agricultural group, and Pepsico, the drinks giant.

"The bar is quite low right now," said one investment strategist to Reuters overnight. "It's not difficult to beat forecasts."

European bourses meantime began the week lower, as the United Kingdom reported a sharp rise in factory input prices in Sept., but slower-than-expected industrial growth. The British Pound slipped after gaining 2.7% against the Dollar over the previous three weeks, dropping to $2.0360. The Euro pulled back half-a-cent to dip below $1.4100.

That kept the Gold Price in Euros above €522.60, barely changed from last Monday's start. For British investors wanting to Buy Gold Today , the week began with a dip below £362 per ounce.

The Japanese Yen slipped to a 7-week low of ¥117.45 per Dollar, capping the drop in Gold Prices for Tokyo investors to just 0.7% from the new 23-and-a-half year high hit at the start of Asian trade last night.

The Bank of Japan will announce its interest-rate policy for the coming month on Thursday. Analysts expect "no change" from the current 0.5%. Before then, however, Tuesday at 18:00 GMT brings the most anticipated official release of the week – the minutes from the Federal Reserve's latest policy meeting.

"It's less likely the economy is going into recession and less likely that the Fed will have to save us," said one bond-fund manager to Bloomberg after last Friday's surprise revision to August's jobs data. Widely assumed to have led the Fed, led by Ben Bernanke, to slash 50-basis points off the cost of borrowing, the number was reversed to show an increase of 89,000, rather than the first fall in non-farm payrolls in nearly four years.

The Fed's desire to cut rates again, however, "will likely be [only] interrupted by false hopes of a housing bottom, fears of a Dollar crisis, or misinterpreted one month's signs of employment gains and faux economic strength," according to Bill Gross, founder and head of Pimco, the world's largest bond fund manager.

"The downward path of US home prices will dominate Fed policy over the next several years, as will the lingering unwind of related financial structures and derivatives that have yet to be discovered by the public, and marked to market by their [off-balance sheet] holders."

Some 2.5 million US homeowners face a sharp increase in their monthly mortgage bills as their "teaser" rates end over the next 12 months.

"The mountain of debt that has been built by the US is inherently deflationary," agrees Richard Russell, veteran investor and chart analyst, in his latest Dow Theory Letter . The United States risks "sinking into a deflationary depression" as a result of the drop in housing sales.

"The choice," Russell concludes, "is inflate or die. Clearly, [Ben] Bernanke has already made his choice. The choice is to inflate."

"Policymakers should not think that the [credit] problems will stay at the desk of the bankers," added Rodrigo de Rato, outgoing head of the International Monetary Fund in an interview with the Financial Times on Saturday.

"Problems are going to come to the real sector, come to the budgets – that is something we keep telling people. The [credit squeeze] is a serious crisis...not a storm in a teacup."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2007

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.

Adrian Ash Archive

© 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