Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19
Betting on Next British Prime Minister Tory Leadership Betfair Markets Forecast - 10th June 19
How Can Stock Market Go Up When We’re Headed Towards a Recession? - 10th June 19
If You Invest in Dividend Stocks, Do This to Double Your Returns - 10th June 19
Reasons for the Success of the Dating Market - 10th June 19
Gold Price Trend Analysis - Video - 10th June 19
US Stock Markets Rally Hard – Could Another Big Upside Leg Begin? - 10th June 19
Stock Market Huge Cosmic Cluster Ahead: Buckle Up! - 10th June 19
Stock Market Higher To Go? - 10th June 19
The Gold Price Golden Neckline… - 10th June 19
Gold Price Seasonal Trend Analysis - 9th June 19
The Fed Stops Pretending - 9th June 19
Fed Rate Cuts Soon; Bitcoin Enthusiasts Join Wall Street in Bashing Gold - 9th June 19
1990s vs. 2010s - Which Expansion Will be Better for Gold? - 9th June 19
Gold Price Trend Analysis, MACD, Trend Channels, Support / Resistance - 8th June 19
Gold Surges Near Breakout - 8th June 19
Could Gold Rally Above $3750 Before December 2019? - 8th June 19
5 Big Lies About Precious Metals Investing Exposed - 8th June 19
ADL Predictive Modeling Suggests A Big Move In Silver - 7th June 19
US China Trade War Will Start a Recession, or Worse… - 7th June 19
Land Rover Discovery Sport Brake Pads Expected Life, Worn Pads Dash Warning - 7th June 19
The Post Room Selfies Fun at Meadowhall Sheffield, From Game of Thrones to Desert Island... - 7th June 19
SAMSUNG - South Korean Electronics Giant - Investing in AI Stocks - Video - 7th June 19
Gold Price Rally or New Bull Market? - 7th June 19
Digging into the Rising Gold: Trade Tensions, Recessionary Worries and Dovish Fed - 7th June 19
The Risky Stocks Big Lie That Keeps Many Investors Poor - 7th June 19
Gold and HUI Short-term Strength Is a Strong Call to Action - 7th June 19
Fear Drives Stock Market Expectations - 7th June 19 - Chris_Vermeulen
Next British Prime Minister Tory Leadership Betting Markets - 6th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Gold Jumps Back Above $1400, as Contagion Hits Eurozone Bonds

Commodities / Gold and Silver 2010 Nov 11, 2010 - 09:47 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD gave back an earlier rise in London trade on Thursday morning, still recording its third-highest ever Gold Fix – and the fourth Fix this week above $1400 an ounce – as Asian stock markets closed marginally higher but European share markets stalled.


US crude oil contracts had leapt to a fresh two-year high above $88.50 per barrel in Asian trade. Three-month copper futures in London touched a new all-time record at $8966 per ton.

The gold price in Euros meantime jumped within 2% of June's all-time high, hitting €33,250 per kilo as Greek, Irish, Portuguese and Spanish government bonds all slumped – dragging the single currency back to yesterday's 1-month low – after a Greek official said Athens' 2010 budget deficit will hit 9.3% of GDP, rather than the 8.1% set by the joint European Union/IMF €110 billion support package.

Last year's Greek budget deficit is also being revised higher, the official said, rising above 15% of GDP.

"Does the [European Central Bank] understand the concept of contagion?" asks RBS bank's Jacques Cailloux in a note.

"The collapse of the Irish bond market [on Wednesday] is testimony that the periphery crisis is developing faster than any European policy maker had anticipated. The ECB should be more proactive and support Spain before the crisis spreads.

"Now is [the] time to act."

The gold price in Euros has now risen 7.3% since the single currency began falling a week ago from new 2010 highs to the Dollar.

At Thursday's AM Gold Fix in London, the daily correlation between Dollar-Gold and the Euro/Dollar exchange rate turned negative for the first time in nine weeks (rolling 1-month basis).

During the first nine years of the single currency's existence, gold and the Euro averaged a strong, positive correlation of 0.50 against the Dollar. That figure would read +1.0 if they moved precisely in lockstep.

The correlation has now been negative – with the Euro and gold moving in opposite directions – on 104 out of 219 trading days in 2010 to date.

"The strong theoretical relationship between gold prices and peripheral European sovereign CDS [credit-default insurance] rates will need to be reappraised" however, reckons the latest Commodities Weekly from Natixis bank, following Germany's proposed changes to the Eurozone's €440 billion emergency rescue fund.

"Private bondholders will henceforth be expected to bear some of the costs in the event of a default or restructuring...instead of leaving tax payers to foot the entire bill," write Nic Brown, Lysú Páez-Cortez, Bernard Dahdah and Micaella Feldstein.

For now, "the strong positive relationship still exists. [But] the explicit removal of a full bail-out for bond holders means many holders of Euros may feel less exposed to a potential sovereign default" via monetary inflation.

"German households already hold more gold that the Bundesbank – the world's second largest central bank holder of gold," Natixis' team concludes. "Merkel's proposed reforms may give them more comfort in holding Euro cash or core-European government debt instead."

Meantime on the data front this morning, Machine Orders in Japan reversed an earlier 10% month-on-month rise, while its Tankan survey showed a sharp decline in business sentiment.

New Zealand reported a jump in domestic food prices, but Australia reported a surprise jump in its jobless rate – news that "failed to dent buying interest" amongst Chinese gold traders however, and "bullish demand" for precious metals continued, according to a Hong Kong dealer, when Beijing reported slower-than-expected but still stellar growth in both Industrial Output and Retail Sales.

China's consumer-price and factory input inflation both rose sharply last month, other new figures showed.

Despite a slight rise in deposit rates, the real rate of interest paid to cash savers fell in October to minus 1.9% per year.

"US monetary policy made a very big mistake under Greenspan and Bernanke," said Nobel-winner and Columbia professor Joseph Stiglitz in a speech today.

"Hong Kong should recognize that it is a very big mistake, and use a full gambit of instruments to stabilize the market," said Stiglitz, urging exchange controls across the world's emerging economies to block "hot money" investment fleeing sub-zero real rates in the rich West.

"China has had capital controls on short-term flows that have worked, not perfectly, but have worked to stabilize [in]flows."

"We are going to be moving into a new global regime in which we will have all kinds of impediments on the flows of capital, of short-term capital."

"The real issue is...how do we coordinate policy?" India's chief negotiator Montek Singh Ahluwalia asked Reuters today, as the G20 summit of developed and top emerging-economy politicians began in Seoul, South Korea.

"I don't think you should be too demanding...because such policy coordination has never been attempted before."

By Adrian Ash

BullionVault.com

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 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