Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Finds Bargain Hunters at $1400 as Saudi King Spends $38bn to Avoid Revolution

Commodities / Gold and Silver 2011 Feb 23, 2011 - 08:21 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE WHOLESALE LONDON PRICE of physical gold held onto this week's early rise again on Wednesday, pushing back above $1400 per ounce as world stock markets fell and crude oil rose to new two-year highs as fresh anti-government protests hit the Gulf state of Bahrain.

More gunfire was reported in the Libyan capital Tripoli, but eastern cities enjoyed "delirious celebrations" at the demise of Colonel Gaddafi's forty-year regime, according to the BBC.


King Abdullah of Saudi Arabia – jointly the world's biggest oil producer alongside Russia, and immune so far to civil unrest – returned from 3 months of medical treatment abroad to announce a near US$38 billion package of housing projects, pay rises and unemployment insurance.

"We have to appreciate that in the west, what is happening in Egypt and North Africa results in stagflation in the short term," says Dr. Mohamed El-Erian, CEO and chief investment officer at US bond-fund giant Pimco, writing in the Financial Times.

"Because of higher oil prices," warns El-Erian, stagflation in the rich West means "higher inflation and lower growth that take away purchasing power and transfer wealth somewhere else."

"Taking advantage of the rise in the price of oil and its effect on the Russian economy," says the FT, Russia will launch a 7-year Ruble-denominated government bond on the European money markets tomorrow.

Moscow was the world's heaviest gold buyer for its central-bank reserves throughout 2010.

"Should Brent crude oil reach $110 per barrel," writes Walter de Wet at Standard Bank today, "the world would be paying almost 6% of global GDP towards oil – well above the 2-3% level seen between 1985 and 2005."

The US Dollar fell on Wednesday, as did US Treasury bonds, ahead of today's $35 billion sale of new 5-year debt and Thursday's $29bn sale of 7-year debt.

Back in precious metals, "There [was] still bargain hunting [in gold] at the lower end," Reuters quotes Ronald Leung of Lee Cheong Gold Dealers in Hong Kong.

"This Middle East crisis won't be easily solved in a short time. There are so many nations involved."

South Korea's banking run continued, meantime, with the closure of the 8th lender this week closing.

Middle East and North Africa region accounted for almost 70% of South Korea's total construction project orders in 2010 according to the government's trade and investment agency.

Wholesale Asian gold trading "was more orderly but directionless" says another Hong Kong dealer, with Tuesday's "enthusiastic" buyers content to sit on their new positions.

"My concern is the [US-listed gold-backed] ETF" trust fund, says a Singapore trader. "The volume is not picking up."

The SPDR Gold Trust yesterday shed another 5 tonnes of gold bullion, taking its holdings down to a 9-month low of 1218 tonnes as investors pulled money out.

Silver ETF holdings have also been falling, with the Silver iShares Trust ending last night with 6.2% less metal than it held the previous Tuesday.

"If this is the start of a correction [in Silver Prices] we see good buying interest toward previous January high 31.23," says the latest technical analysis from bullion bank Scotia Mocatta.

Silver prices today rose back above $33 per ounce, but held more than 3% shy of Tuesday's new 31-year highs.

"We must make policy based on the best available [inflation] forecast, learning from our past mistakes, and not be tyrannized by popular fears or spectres of expectations," said career US academic Adam Posen – who voted for the fifth month running to increase the Bank of England's quantitative easing program at this month's meeting – in a speech on Tuesday.

For three of his eight colleagues on the monetary policy committee, however, "the case for removing some monetary stimulus at this month's meeting was compelling," minutes from the 10th Feb. decision showed.

Martin Weale and fellow academic Andrew Sentance were joined by senior Bank insider Spencer Dale – ex-advisor to the US Federal Reserve and former secretary to governor Mervyn King – in voting for a hike in rates.

Sterling was little moved by the news, holding the gold price for UK buyers just below £865 per ounce.

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