Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Gold Rises, Physical Demand Due to Inflation and Low Interest Rates, Not Middle East Crisis

Commodities / Gold and Silver 2011 Feb 17, 2011 - 12:46 PM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD continued rising for US investors on Thursday, finishing the day in London at a five-week high of $1383 per ounce as world stock markets held flat and the Dollar slipped on the currency market.

Developed-world government bonds ticked higher, as did crude oil prices, as Libya became the latest Middle Eastern country to see protests against its government on Wednesday, joining Algeria, Iran, Jordan and Morocco, as well as Tunisia and Egypt, which have already seen their long-time regimes fall.


"Support for metals will continue to come from tensions in the Middle East," reckons precious-metals analyst Tom Pawlicki at brokers MF Global in Chicago.

State TV in Bahrain reported today that the military will "take every measure necessary to preserve security" after 3 more anti-government protestors were killed.

"If things continue the way they are [in Russia], I think the probability of the Egyptian scenario will grow," said former Soviet president Mikhail Gorbachev in a widely-reported radio interview on Thursday.

"I'm ashamed for us and for the country," Gorbachev also told the Novaya Gazeta newspaper, accusing the "ruling class" of being "rich and dissolute".

Thursday's geo-political news left gold prices little changed outside the US Dollar, however, holding flat near yesterday's 1-month highs for Euro, Sterling and Japanese Yen buyers.

Official data today showed US consumer-price inflation rising to analyst forecasts of 1.6% year-on-year in Jan., forcing real interest rates paid to cash savers further below zero.

"Private investors, not only in the USA but also in Asia and Europe, clearly have a different point-of-view on the actual global economic and financial situation [from] institutional market-participants," writes Wolfgang Wrzesniok-Rossbach, head of sales at German refinery Heraeus, in his latest market report.

Private individuals "are still very much on the buying side, be it due to fear of inflation or worries about distortions in the international currency markets," says Wrzesniok-Rossbach.

"However this group is not going for exchange traded products like ETFs or certificates, but for physical metal directly."

Latest data from market-development and research group the World Gold Council shows a marked drop in new ETF trust-fund and "unallocated" gold account demand in 2010, both down 45% from 2009's record peaks.

"Demand for gold bars...maintained an impressive rate of growth in the fourth quarter," says the WGC's new Gold Demand Trends report, "gaining 63% year-on-year.

"The annual comparison was scarcely less impressive, 56% up on 2009 levels at 713.2 tonnes...Growth in this sector was dominated by China, where investors continued to clamour for gold bars and coins."

Overall, the WGC's new Gold Demand Trends says, total global gold demand in 2010 rose 9% by volume to its highest level since 2000, back when the gold price was just 22% of last year's average level.

Global copper supplies meantime shrank from a 410,000-tonne excess of supply over demand to a 20,000-tonne surplus in 2010, according to the World Bureau of Metal Statistics.

Slipping back from this week's new record highs on Thursday, copper prices "need to fall 20%" reckons New York hedge fund Red Kite, if China – the world's No.1 buyer – is to grow its demand substantially in 2011.

"While we do not view Chinese monetary policy as a long-term threat to rising demand for commodity prices, it does increase short-term price risks," says Standard Bank's daily commodity email.

Noting that "the real deposit [interest] rate in China is still negative and remains very accommodative," the opportunity cost of holding real assets – and "especially gold – remains low," says Standard.

"However, we do view credit rationing (fewer loans) and a substantial rise in the reserve requirement ratio of banks as a greater immediate negative impact to commodity prices."

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