Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Rebounds after Asia Selloff, Soros Warns "Economic Collapse Will Spread"

Commodities / Gold and Silver 2011 Jun 27, 2011 - 08:23 AM GMT

By: Ben_Traynor

Commodities A HEAVY selloff during Asian trading on Monday saw the gold price hit a five-week low of $1492 an ounce – before staging a rally after London opened – while stocks were flat and commodities fell further.

The gold price at the London Fix on Monday morning was $1501 an ounce – a 0.9% drop from Friday afternoon.


Silver prices meantime fell to $33.60 per ounce – a 2.1% drop from Friday's close – before they too rallied.

The Greek parliament began debating a €78 billion austerity package Monday, ahead of a vote on Wednesday. Unions have called a 48 hour general strike on Tuesday and Wednesday in protest at the measures.

"Gold saw decent physical buying" in Asia while the price-per-ounce was above $1500, says a bullion dealer in Hong Kong. Once the gold price fell through that level, however, liquidation of short-term positions was "relentless" as stop losses were triggered.

Commerzbank analysts say they do not expect the gold price to retreat much further, as it is "still uncertain whether [the Greek] parliament will give its approval" to austerity measures, according to a note issued Monday by the German investment bank.

Failure to pass the austerity package will jeopardize an additional aid deal, as well as further payments of last year's bailout.

Greece's debt problem "probably needs...a 30-year time horizon to solve," former Bundesbank president Axel Weber told the Wall Street Journal on Monday.

Eurozone governments must choose between "default...partial haircuts or a guarantee [to cover] the outstanding amount of Greek debt," said Weber, adding that "the current piecemeal approach...inevitably leads to the latter solution."

"Let's face it: we are on the verge of an economic collapse...[that]could easily spread" beyond Greece, says billionaire investor George Soros.

Over in the US, President Obama is due to meet Senate majority leader, Democrat Harry Reid, and Senate minority leader, Republican Mitch McConnell, in separate meetings on Monday "to find common ground on a balanced approach to deficit reduction."

The meetings are aimed at brokering an agreement that would clear the way for Congress to approve a rise in the federal debt ceiling, currently set at $14.3 trillion. The US Treasury predicts it will hit that limit on August 2 – after which point it may have to default on existing debt if it cannot borrow more.

Missing a debt payment would represent a "fundamental change" in US creditworthiness, threatening its Aaa credit rating, Steven Hess, US analyst at ratings agency Moody's, warned last week.

"[The risk that] this might happen again...is perhaps not compatible with Aaa."

If the US were to suffer a ratings downgrade, US Treasury bonds "would likely drop in value, possibly by as much as $100 billion", according to research by S&P Valuations and Risk Strategies.

Over in Switzerland meantime, The Bank for International Settlements – often called the central banks' bank – warned in its annual report on Sunday that ultra-low interest rates "increasingly risk a reprise of the distortions they were originally designed to combat" and that global challenges such as inflation " are a direct consequence" of accommodative monetary policies.

"With the arrival of sharper price increases for food, energy and other commodities, inflation has become a global concern...the logical conclusion is that, at the global level, current monetary policy settings are inconsistent with price stability." 

"Real interest remains in negative territory," says Dominic Schnider, analyst at UBS Wealth Management, meaning the gold price "should keep the uptrend we have seen since 2008" over a six-month time horizon.

"And if you look at emerging markets, inflation remains stubbornly high... I think this remains quite supportive."

Here in the UK, Chinese premier Wen Jiabao – who began a three-day visit to the country on Monday – said he sees "difficulties in reaching [China's] full-year inflation target of 4%". 

This follows a piece he wrote in Friday's Financial Times in which he said his answer was "an emphatic yes" to questions of whether China could rein in inflation and sustain rapid growth.

By Ben Traynor
BullionVault.com

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.


© 2005-2022 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