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
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Worst Month Since Dec 2009 Despite as US Inflation Doubling

Commodities / Gold and Silver 2011 Jan 28, 2011 - 08:58 AM GMT

By: Adrian_Ash


THE PRICE OF gold failed to rally from last night's tumble in Asian and London trade on Friday, extending Jan.'s sharp losses to hit four-month lows in the US Dollar and six-month lows against the Swiss Franc and "commodity currency" Australian and Canadian Dollars.

London shares extended a fall in Asian stock markets, and major-economy government bonds ticked lower.

Broad commodity markets were little changed, but the silver price fell to its lowest level in 10 weeks at $26.45 per ounce.

"The effect of waning investor demand [has been] aggravated by the absence of physical buying" in Asia, says today's note from Standard Bank's London commodity team.

Open interest in US gold futures shrank by 14% on Tuesday this week, as traders closed more than 81,000 contracts ahead of Jan.'s month-end expiry.

The giant SPDR Gold Trust shed another 3 tonnes of bullion on Thursday, taking this month's redemption from the world's No.1 gold ETF to 4.2% by weight – its sharpest contraction since just before Lehman Bros. failed in Sept. 2008.

"[This] reduced demand for safe-haven assets [comes] on the prospect of a strengthening global economy," says Standard.

But after Thursday showed a sharp rise in new US jobless claims, however – plus a drop in Durable Goods orders – new GDP data further disappointed analysts today with 3.2% growth for the end of 2010.

Domestic US price inflation more than doubled from Sept. to Dec., said the Bureau of Economic Analysis. So too did Real Personal Consumption Expenditures, rose 4.4% from 12 months before.

US interest rates have now been on hold between 0.25% and zero since Dec. 2008.

"Everyone focuses on what the Fed is doing, but for the gold market it is also important what the Chinese and Indian central banks are doing," notes French bank – and London bullion dealer – Natixis in its latest commodities analysis.

"Monetary tightening to combat inflation is weighing on Asian shares," said investment strategist Shane Oliver at the $93 billion AMP in Sydney to Reuters overnight.

New property tax laws in Shanghai and Chongqing came into force today, costing second-home owners up to 1.4% by value per year.

"China gold buying for Lunar New Year and bargain hunting from other areas in Asia was slow" on Friday says metals conglomerate Mitsubishi's dealing-desk in Tokyo.

"With Chinese New Year coming up next week, physical demand for platinum [in particular] has dried up in the past two days," says a Hong Kong dealer.

Losing 6.7% from the end of Dec., the gold price has now suffered its sharpest month-on-month drop since Dec. 2009 for Dollar investors, and the sharpest drop in Sterling and Euros since July 2010.

"The macro cues for owning gold remain largely unchanged," says another London dealer, "but outside of another stumble from Europe they are still a long ways [from] providing a bid in the short term."

Analysis published this week by Citigroup shows the Central Bank of Ireland propping up Irish banks with €49 billion of "emergency liquidity assistance".

If accounted as a guarantee of the Irish state, that sum would take Dublin's true debt-to-GDP ratio from a record 114% up to 145%.

"Should the sovereign be unable to bail out its central bank...a financial rescue by the rest of the Eurosystem [would mean] the national central bank would have created 'money' independently of the European Central Bank."

Calling such an outcome "a challenge to the very essence of monetary union", Citi likens it to the Rouble zone which followed the collapse of the Soviet Union and swiftly sank into "a series of chaotic hyperinflations".

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 2011

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