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
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24
Banxe Reviews: Revolutionising Financial Transactions with Innovative Solutions - 3rd May 24
MRNA - The beginning of the end of cancer? - 3rd May 24
The Future of Gaming: What's Coming Next? - 3rd May 24
What is A Split Capital Investment Trust? - 3rd May 24
AI Tech Stocks Earnings Season Stock Market Correction Opportunities - 29th Apr 24
The Federal Reserve's $34.5 Trillion Problem - 29th Apr 24
Inflation Still Runs Hot, Gold and Silver Prices Stabilize - 29th Apr 24
GOLD, OIL and WHEAT STOCKS - 29th Apr 24
Is Bitcoin Still an Asymmetric Opportunity? - 29th Apr 24
AI Tech Stocks Earnings Season Opportunities - 28th Apr 24
S&P Stock Market Detailed Trend Forecast Into End 2024 - 25th Apr 24
US Presidential Election Year Equity Performance in the Presence of an Inverted Yield Curve- 25th Apr 24
Stock Market "Bullish Buzz" Reaches Highest Level in 53 Years - 25th Apr 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Ends Up Against US Dollar, Down Against Euro, Debt Ceiling Row turns Constitutional 

Commodities / Gold and Silver 2011 Jul 01, 2011 - 03:09 PM GMT

By: Ben_Traynor

Commodities Best Financial Markets Analysis ArticleTHE U.S. DOLLAR spot price of gold bullion slumped to a one-month low of $1489 per ounce  Friday morning London time – 5.5% down on May's all-time high – as stocks gained and commodities fell.

US newspapers meantime reported Friday that the very existence of a US federal debt ceiling may be unconstitutional.

Going into the weekend, gold bullion looked set for a loss of 0.8% loss for the week at Friday lunchtime London time.

Over in Athens, meantime, the Greek parliament passed the second austerity vote on Thursday.
Despite the Greek crisis, it is not the Euro but the US Dollar that saw the biggest decline against gold of major currencies in the first half of the year.

The wholesale market Dollar gold price rose 6.1% in the six months to the end of June. Gold bullion in Euros, meantime, saw its price fall over the same period, by 2.1%.

"Despite the most recent setbacks we do not see any reason to say that the multi-year gold rally has come to an end," says German refiner Heraeus, adding that financial markets are "still too uncertain".

"Larger setbacks...should be used by investors as well as industrial end users as fresh entry-points to add to stock."

The silver price fell to $33.87 per ounce on Friday morning in London – a 31.8% loss from its 31-year high at the end of April.

"Silver fundamentals remain weak and heavily dependent on investor interest to plug the gap," says a research note by Barclays Capital.

Silver prices were heading into the weekend around 1% down on the week by Friday lunchtime in London. Silver ended a rollercoaster first half of the year up 12.6%.

President Obama could meantime declare the federal debt ceiling to be unconstitutional, newspapers reported on Friday. 

If Congress does not pass a vote to raise the $14.3 trillion limit – which the US Treasury says it will hit on August 2 – Obama may invoke the Fourteenth Amendment to the US constitution, and instruct Treasury secretary Tim Geithner to keep borrowing in order to meet upcoming obligations, such as maturing debt payments.

Section 4 of the Fourteenth Amendment states:

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

"If we didn't pay our bills," Senate Majority Leader, Democrat Harry Reid, said on Thursday, "it would plunge the United States not into a recession, not into the so-called double-dip recession, but into a full-blown depression." 

Geithner says he is confident that Congress "will do the right thing" and agree to raise the debt ceiling.

"You'll see more people out of work, more business fail" if the ceiling is not raised, the Treasury secretary told a Clinton Global Initiative conference on job creation on Thursday.
Geithner added that spending cuts to reduce the federal deficit must be done in a "growth-friendly" way.

Newspapers reported Friday that Geithner may quit as Treasury secretary once the debt ceiling issue is resolved.

Over in Europe, the Euro continued to rise against the Dollar after the Greek parliament agreed on the implementation of austerity measures.

"Does gold [now] lose some of its allure as an alternative currency?" asks a bullion dealer here in London, noting that Thursday was also the scheduled end of QE2 – the Federal Reserve's $600 billion asset purchase begun last November.

"Perhaps for a day or two: the risk bid has certainly been reduced."

"The seeming resolution of the Greece crisis has probably hurt gold," agrees Citigroup analyst David Thurtell.

"But I think there's enough interest from the Chinese and central banks to sustain it at around $1500 for now."

The Greek central bank added slightly to its gold reserves in May, the Wall Street Journal reported Friday. Greece bought 1000 ounces (0.03 tonnes) of gold bullion.

World Gold Council data published last month show official Greek reserves at 111.4 tonnes of gold bullion – just under 79% of total central bank reserves.

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.

© 2005-2022 - 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