Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Gold & Silver Hit 1-Week Low "on Euro Fears"

Commodities / Gold and Silver 2011 Mar 10, 2011 - 07:52 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF BOTH gold and silver bars fell hard against the Dollar in London on Thursday, dropping to 1-week lows – as did the single Euro currency – after the Moody's rating agency downgraded Spanish government bonds and China reported a surprise trade deficit for Feb.

Brent crude oil dropped more than $2 per barrel. World stock markets lost over 1.2%, with London's FTSE-100 falling to a 5-week low.

"Uncertainty over Euro negative news is outweighing general financial stress, which should be gold positive," says one London dealing desk.

"There has been no change in physical [gold] market activity," says James Zhang at Standard Bank, "which remains lacklustre even though prices have moved lower.

"With no news on developments in the Middle East-North Africa region, most investors are waiting on the sidelines."

Here in London on Thursday, the Bank of England voted to leave UK base rates unchanged, pegging them at a record low of 0.50% for the 25th month in succession – the longest stretch of unchanged rates since the two decades of 2.00% starting in the depths of the 1930s' Great Depression.

Lagging the cost of living at the worst pace since 1978, real interest rates are now delivering a net loss of 4.5p in the Pound to cash savers per year.

Over in Beijing, meantime, the People's Republic today posted a trade deficit equal to $7.3 billion for last month – the biggest deficit in 7 years.

"It could be just a blip," says a note from IHS Global Insight in London, with many other analysts also pointing to Feb.'s long Chinese New Year holidays and gift-giving festivities.

"[But] China would have run a surplus of $16 billion over the first two months of the year if commodity prices were unchanged from a year ago," counters Mark Williams, senior economist at Capital Economics.

A net importer of gold despite now being the world's No.1 mining producer, China saw 200 tonnes of demand during Jan. and Feb. according to an estimate from Swiss bank and bullion market-maker UBS.

Gold imports totaled 209 tonnes between Jan. and Oct. last year, the Shanghai Gold Exchange said in Dec. – a rise of more than four times from the same period in 2009.

In silver bullion, China exported a net 1,075 tonnes as recently as 2006, but it imported nearly 3 times that much in the first eleven months of 2010 alone, according to customs' data.

"Changes in net Chinese imports appear to be closely correlated to longer-term price movements in the silver market," noted David Jollie at Mitsui recently.

Back in Thursday's action, "There are short-term traders and investors who want to reap profits after the rally," said Seoul-based trader Chae Un Soo at KEB Futures to Bloomberg today.

"Losses will be limited as there's an enormous interest in gold and precious metals."

Asian trading saw the market "[run] out of ideas to push the metals either way," says a Hong Kong dealer in a note.

Silver prices in London today bounced higher from $35.12 per ounce – some 4.5% below Monday's new 31-year high.

The gold price bottomed at $1418 – just shy of the then-peak prices hit 3 times between Nov. and Dec. last year, and 1.9% below this week's new all-time high.

Versus the Pound Sterling and Eurozone single currency, in contrast, both gold and silver were unchanged for the week by lunchtime today.

Less than a week after downgrading Greek government debt yet again, the Moody's agency this morning nudged Spain's credit rating lower, citing  "high funding requirements, not only for the sovereign but also for the regional governments and the banks."

"We are surprised that Moody's has taken this decision before knowing the details of the [Bank of Spain's] report on the recapitalization of the Spanish financial sector," said Treasury director Soledad Nunez to Reuters.

Government bonds including weaker "peripheral Europe" rose in price as stock markets fell, however, nudging interest rates lower even on Spanish debt, where 10-year yields ticked back down to 5.50%.

France meantime became the first country to recognize Libya's opposition party, the NLC, as the oil-producer state's legitimate government.

The International Red Cross today called the on-going conflict a "civil war", while Nato chiefs planned a meeting to discuss enforcing a 'no-fly zone' above Libya to prevent further air strikes by Gaddafi loyalists.

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