Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
How to Play Interest Rates in US Real Estate - 20th Aug 19
Stocks Likely to Breakout Instead of Gold - 20th Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 20th Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 20th Aug 19
Holiday Nightmares - Your Caravan is Missing! - 20th Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Gold "Consolidates", Re-Asserts Link with Euro

Commodities / Gold and Silver 2011 Apr 04, 2011 - 10:30 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD rose Monday morning in London, nearing last week's high of $1439 per ounce as energy prices led a rise in commodity prices and silver bullion jumped more than 1.8% to fresh 31-year highs.

Stock markets were mixed, rising in Hong Kong and London but holding flat in Tokyo and Paris, while Brent crude oil rose to a new 30-month peak near $120 per barrel.


New data showed the fastest year-on-year rise in Eurozone factory-input prices since Oct. 2008

"[Only] an aggravation of the crisis of the sovereign debt" will stop the ECB raising rates reckon Commerzbank analysts in Frankfurt.

German government debt prices fell for the 8th day running this morning – the longest losing streak for 10-year Bunds since mid-2006 according to Bloomberg – ahead of Thursday's pre-announced interest rate hike by the European Central Bank.

"It is a shocking decision," says Jacques Cailloux at RBS in Paris. "We thought that the ECB would wait until September."

Interest rates on Portuguese government bonds rose to new post-Euro highs, hitting 8.60% per year on 10-year bonds, after accountancy giants Ernst & Young said that Lisbon will most likely need a bail-out before the general election called for June 5th.

"The ECB simply cannot raise rates too aggressively without breaking up the Eurozone," warns Simon Maughan at MF Global here in London.

On the forex market the Euro currency was little changed against the Dollar on Monday, standing 2.7% higher from ECB president Trichet's announcement a month ago.

Gold priced in the Dollar stood unchanged from early March, leaving the gold price in Euros some 2.3% lower for German, French and Italian investors.

Previously moving in the opposite direction to gold on average so far in 2011, however, the Euro currency has since shown a positive daily correlation with the gold price in Dollars.

The average correlation of +0.70 between gold and the Euro over the last month is also stronger than the last decade's average of +0.47.

It would read +1.0 if they moved precisely in lockstep. Last May's Greek deficit crisis saw the Euro's link with Dollar gold prices slump to a near-perfect inverse correlation of –0.92 as the single currency fell and bullion rose.

"[The Dollar gold price] has closed near $1425 for the past four consecutive weekly sessions," notes bullion bank Scotia Mocatta, "[and] appears to be consolidating the January to March up move.

"We believe the price action is continuation in nature, with an eventual resolve to the topside to $1500."

Also noting the "strong weekly close" in silver prices, "most...technical studies are still clinging to bullish signals," says Scotia.

"It is very difficult to fight the momentum" in silver prices, says a London dealer today.

Breaking through $38.00 early in Monday's trade, "it seems the stage has been set for another crazy leg of upward movement in silver," says a Hong Kong dealing desk.

"This is now a classical bubble when price movement itself becomes the reason for price movement."

Back in the gold market, exchange-traded trust funds experienced a second week of outflows on the latest data compiled by London's VM Group consultancy, with the giant SPDR Gold Trust shrinking to an 11-month low of 1211 tonnes.

Leveraged speculators in the gold futures market also trimmed their positions last week, say the latest Commitment of Traders data from US regulator the CFTC.

"[But] while the gold futures market is not overly bullish, the physical market is still a steady buyer," says Standard Bank's Walter de Wet, repeating his view that real interest rates "remain exceptionally low" and global liquidity continues to rise, pushing gold higher.

"The physical market is once again adjusting to a higher gold price, which we view as bullish...We now see increased buying whenever gold dips towards $1400."

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