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
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2022 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