Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter


Gold Rally Dented by the Return of Risk Appetite

Commodities / Gold and Silver 2011 Jun 01, 2011 - 09:02 AM GMT

By: Ben_Traynor


THE SPOT MARKET price of gold bullion dropped overnight, before beginning Wednesday morning London time by trading in a tight range around $1532 per ounce – up 1.3% from the start of last week – while stocks and commodities were flat. 

The Euro held steady above $1.44 following reports that a new bailout for Greece could be agreed by the end of the week.

Silver prices meanwhile hovered around $38 per ounce, where they have spent the last week.

Taking May as a whole, however, silver was more volatile than at any time since May 1987 – with price volatility nearly four times greater than its 40-year average. 

Daily volatility for gold, by contrast, was almost exactly in line last month with its average of the last four decades.

"[Gold was] slowed down by the return of risk appetite," says Swiss precious metals group MKS. 

"However, judging by the instability of...the Eurozone debt situation we could see a return to risk aversion very soon."

"Some investors are emboldened by signs that Greece will get a bailout and avoid default, and are selling their gold," says Hwang Il Doo, senior trader at KEB Futures in Seoul. "Minor losses are inevitable for gold to extend its bull run."

A team of inspectors from Greece's troika of creditors – the EU, European Central Bank and International Monetary Fund – are currently in Athens discussing the terms of a new bailout – reported by Reuters on Wednesday to be worth around €65 billion.

Greek newspaper Kathimerini says talks will be completed by Thursday at the latest. 

"It is hard to see a very rapid rally in the euro from here while the discussion continues in public," says Adrian Schmidt, economist at Lloyds Banking group. "[But] we suspect the worst of the crisis is over."

"We are getting to a situation where markets are getting a feel that the European policymakers will get Greece back on track," adds Audrey Childe-Freeman, head of European currency strategy at JPMorgan Chase.

"This is not a country-specific crisis; it is a systemic crisis across the whole Eurozone," counters Standard Bank currency strategist Steve Barrow.

"If Greece receives a second bailout soon it's likely to do little more than raise the pressure across the region, both on those that have been bailed out already and on those that could be bailed out in the future."

Barrow adds that even kicking Greece out of the Euro would not solve the problem, but would "merely raise the contagion threat".

"I don't think we are close to having [the Greek debt crisis] completely solved yet, and the [Gold Bullion] market will remain skeptical and well supported," says Darren Heathcote, head of trading at Investec Australia.

Over in India – the world's largest gold bullion market – demand has been "dull" since the Hindu festival of Akshaya Tritiya on May 6, Prithviraj Kothari, president of the Bombay Bullion Association, told the Wall Street Journal earlier this week.

"There is no demand for silver. Gold is quoting at a discount [to international prices]."
Akshaya Tritiya is typically the second-heaviest gold-buying season. Demand typically peaks around Diwali, which falls in the fourth quarter.

Indian GDP, meanwhile, was up 7.8% in the first quarter of 2011, compared to the same period last year, according to latest figures from the Central Statistics Office. This compares to a gain of 8.3% year on year for the previous quarter.

"With output at or above potential, [India's] economy faces a natural speed limit," says Leif Lybecker Eskesen, chief economist for India at HSBC. "The elevated level of inflation will also in itself dent growth, including by raising uncertainties about economic prospects until it is firmly under control." 

By Ben Traynor

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(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