Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
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
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19

Market Oracle FREE Newsletter

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

Gold Rises as Stocks Slip

Commodities / Gold and Silver 2011 Feb 11, 2011 - 09:27 AM GMT

By: Adrian_Ash

Commodities

DOLLAR-PRICED GOLD held onto this week's 1% gain in London trade by Friday lunchtime, holding steady against the rising US currency as bonds pushed higher but world stock markets headed for their first weekly loss in three.

"Euro denominated gold has now convincingly broken back above the €1000 level" per ounce, says one London dealer in a note.


The gold price in Sterling today rose above the £852 level it touched four times in the last three weeks.

"We expect all the Chinese to be back in the game on Monday" says Swiss-based MKS Finance, echoing comments from many Hong Kong and London dealers, after the long Lunar New Year holiday extended into this week.

"Activity in China remains muted [but] there is evidence of strong interest for silver," says Standard Bank.

"China's recent rate hike is also fuelling these inflation worries."

Silver prices ticked lower Friday morning in London, but neared their third week-on-week gain in succession – adding some 14% against Dollars, Euros and Sterling alike from end-Jan.'s two-month lows.

"With inflation in China expected to be above 5% for much of the early part of 2011, [its rising] rates are not yet at levels that offer an attractive opportunity for savers," says Nic Brown and the commodities team at French bank Natixis.

"But with each rate increase the opportunity cost [in missed interest payments] of holding gold rises."

South Korea's central bank surprised the market on Friday by keeping its key lending rate on hold. Vietnam meantime devalued its currency, the Dong, by 9% vs. the US Dollar – the second such move in 6 months – after the Communist Party's recent 5-year congress ordered the central bank to "stabilize the macroeconomy".

"Demand from China, India and central banks has been strong over the last year," says Natixis. But "if western investors become net sellers of gold the market may find it difficult to sustain the current elevated prices," it adds, noting early 2011's strong outflows of metal from the large exchange-traded gold trusts.

The giant SPDR gold ETF shed another tonne of bullion on Thursday to near January's 9-month low of 1224 tonnes held in trust.

Following a week of strong earnings results from publicly-listed gold mining companies in North America and South Africa, slack investor interest last night forced Severstal to pull the £441 million ($709m) float of its Nord Gold division on the London stock market – "the fourth Russian offering in the City to be hit by emerging market outflows in less than a week" says the Financial Times.

Mid-sized Dutch pension fund SPVG was meantime ordered by its regulator to sell three-quarters of its 13% allocation to gold, because that level is not "prudent".

SPVG is 85% invested in Dutch and German government bonds, says SPVG – which runs €300m for employees of glass manufacturer Vereenigde Glasfabrieken – adding in a statement that "The fund has its formal obligations secured in Euros.

"But the Euro is actually secured by trust in government...[and] the decision to invest in gold is actually an insurance."

Reporting a 67% gain since its 2008 purchase, "This [insurance] is also the same argument of central banks and the IMF for holding large gold positions," says SPVG, vowing to appeal the judgement but accepting that it may have to sell down its gold allocation.

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 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 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