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
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

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