Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Crash Edition - 26th Mar 19
Handy Ways to Boost Your Home Income - 26th Mar 19
US Treasury Bond Yield Inversion and Political Fed Cycles - 26th Mar 19
Golan Heights Oil all about the Shekels - 26th Mar 19
Falling Yields a Catalyst for The Gold Catalyst - 26th Mar 19
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Gold Gives Back Overnight Rally as British Pound Slumps, Bonds Rise & Stock Markets Slide on Fresh Economic Worries

Commodities / Gold & Silver Nov 15, 2007 - 09:20 AM GMT

By: Adrian_Ash

Commodities THE SPOT GOLD PRICE failed to hold onto its overnight gains early on Thursday, dropping back to bounce off $802 per ounce after recording an AM Fix in London of $806.


Losing more than 1% from Wednesday's Afternoon Fix in terms of the US Dollar, however, today's benchmark price was higher for both European and British investors wanting to Buy Gold Now , as the US currency rallied on the foreign exchange markets.

By lunchtime here in London , the Euro had dropped more than 1¢ to $1.4610, helping the Gold Price in Euros reach €550.40 per ounce.

For British investors, the Gold Price in Sterling rose back to £393.50 per ounce after slipping from a three-session high of £398 at the start of today's trade.

The British Pound itself, in the meantime, sank to a three-week low of $2.0420 – and it plunged to a four-year low versus the European single currency – on news that UK retail sales fell for the first time in nine months in October.

The 0.6% rise in retail sales previously reported for Sept. was also revised down. Yesterday the Bank of England said it may cut interest rates twice in early 2008, despite rising inflationary pressures, in an attempt to counter a slowdown in the British economy.

"The fundamentals of the Gold Market remain unchanged," reckons K.Venkatraman, head of trading at Suraj Diamonds in Mumbai, speaking to the Economic Times of India earlier today.

"The Dollar continues to be weak against the Euro and other currencies. Softening of crude oil prices is the only consolation. But Gold Prices have risen quite sharply and a correction was long overdue.

"In India , local Prices may touch 9,700 Rupees per 10 grams [equal to $767.99] before they peak again."

The surge in Gold Market prices since August has indeed dented growth in world demand for gold jewelry, said an authoritative report issued on Wednesday. The World Gold Council's latest Gold Demand Trends says that gold jewelry demand grew by just 6% in tonnage terms between July and Sept. compared with a year earlier.

In India – destination of one-in-five ounces of gold sold worldwide last year – demand growth slowed to just 5% during summer '07, down from 59% year-on-year during the first half of this year.

"The demand for gold is sustainable in the long term," said Jill Leyland, chief economist for the World Gold Council on South Africa 's Radio 2000 last night.

"There will be hiccups in the short term because the markets, particularly in India , do not like price volatility. But as soon as the Gold Price stabilizes, demand will come back regardless of what the price is."

"We saw a short-term pick up in September and that should continue because of what is happening to the US Dollar and the world economy."

Gold's sharp bull run also hit the professional gold market last month according to the latest data from London Bullion Market Association, where the world's physical Gold Trading is centered.

The number of ounces transferred by LBMA members in October fell 3.2% from the same month last year. The value of those transfers rose by 24.4%, however, and the number of deals rose by nearly 37%.

"We expect high volatility in gold to continue for a while before the market bottoms out," reckons Si Kannan of Kotak Commodities in Mumbai , India .

"The medium to long term clearly remains bullish, but there is 68% probability that market will range between $793 to $823 per ounce. Only a close above $850 would open a new range of $850-950."

In the broader commodity markets, crude oil prices slipped further below $94 per barrel ahead of today's US stockpile data, due at 10:30 EST.

Wall Street futures also pointed lower after Japan 's Nikkei index closed the day 0.7% lighter – taking its decline for the year-to-date to almost 11% – and European equities dropped nearly 1% on average.

Barclays Bank, the third largest bank in the UK , today announced a writedown of $2.7 billion on its US mortgage-bond investments, way below the $10bn losses rumored last Friday. But the 9¢ bounce in its stock today still leaves BARC trading nearly 25% down from 12 months ago.

On the economic front, all eyes are now on the US consumer-price index, due for release at 08:30 EST. Following Wednesday's surprise drop in US Producer Price inflation, Wall Street analysts now expect the surge in world energy prices to only push the CPI up by 3.5% year-on-year from Sept.'s 2.8% rate of increase.

But with two-year US Treasuries now yielding less than that at 3.45% today, the ongoing "flight to safety" in fixed-income Dollar assets is looking more like "out of the frying pan into the fire" with every rally in bond prices.

"There's still great uncertainty about the economy and that's supporting Treasuries," says Glenn Marci, a fixed-income strategist at DZ Bank in Frankfurt . "We're [also] seeing a reaction to the fall in stocks."

Yields on two-year German bunds dropped to 3.86% as European equity prices fell again. The continent's 100 largest stocks have now dropped more than 5% of their value in the last month.

Japanese government bonds also pushed higher as Tokyo equities fell today, sending the yield offered by 10-year JGB's to 1.50% – a level last seen when the Bank of Japan's policy rate stood at zero.

Slashing Japanese interest rates failed to reignite the Japanese economy after its debt-bubble burst in late 1989. Nearly 18 years later, falling wages and real estate prices continue to dog consumers and investors alike.

Savers putting their money into Gold Bullion Investment during Japan 's ongoing depression, on the other hand, have now tripled their money in the last six years. Since the Tokyo Bubble burst almost two decades ago, the value of gold in terms of Japan 's Nikkei stock index has risen nearly five-fold.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2007

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.

Adrian Ash Archive

© 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