Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Is Natural Gas Price Ready For An April Rally? - 8th Apr 20
Market Predictions And The Business Implications - 8th Apr 20
When Will UK Coronavirus Crisis Imrpove - Infections and Deaths Trend Trajectory Analysis - 8th Apr 20
BBC Newsnight Focuses on Tory Leadership Whilst Boris Johnson Fights for his Life! - 8th Apr 20
The Big Short Guides us to What is Next for the Stock Market - 8th Apr 20
USD Index Sheds Light on the Upcoming Gold Move - 8th Apr 20
The Post CoronaVirus New Normal - 8th Apr 20
US Coronavirus Trend Trajectory Forecast Current State - 7th Apr 20
Boris Johnson Fighting for his Life In Intensive Care - UK Coronavirus Crisis - 7th Apr 20
Precious Metals Are About To Reset Like In 2008 – Gold Bugs, Buckle Up! - 7th Apr 20
Crude Oil's 2020 Crash: See What Helped (Some) Traders Pivot Just in Time - 7th Apr 20
Was the Fed Just Nationalized? - 7th Apr 20
Gold & Silver Mines Closed as Physical Silver Becomes “Most Undervalued Asset” - 7th Apr 20
US Coronavirus Blacktop Politics - 7th Apr 20
Coronavirus is America's "Pearl Harbour" Moment, There Will be a Reckoning With China - 6th Apr 20
Coronavirus Crisis Exposes Consequences of Fed Policy: Americans Have No Savings - 6th Apr 20
The Stock Market Is Not a Magic Money Machine - 6th Apr 20
Gold Stocks Crash, V-Bounce! - 6th Apr 20
How Can Writing Business Essay Help You In Business Analytics Skills - 6th Apr 20
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold Close to $1600 as U.S. and Europe's Debt Crisis Creates Bullish Cocktail

Commodities / Gold and Silver 2011 Jul 14, 2011 - 01:37 PM GMT

By: Ben_Traynor

Commodities Best Financial Markets Analysis ArticlePRICES to buy gold bullion came within a few cents of $1595 an ounce Thursday morning London time – a new wholesale market record and a 7.8% gain from the July 1 low.

Gold bullion also set a Dollar record in Dollar terms at Thursday morning's London Fix, at $1592.50 per ounce.


Silver prices rose to $39.39 per ounce – 16.3% up in the period since July 1.

Stock markets and US Treasury bonds fell meantime, while the commodities picture was mixed, after US debt ceiling talks again stalled and the country was threatened with a sovereign debt downgrade.

"Gold is becoming more attractive by the day despite being on or near record highs," says Swiss precious metals group MKS, citing the worsening Eurozone crisis and potential US default.

"Gold is reacting to a similarly bullish cocktail of factors" as the second quarter of 2010, adds James Steel, precious metals analyst at HSBC.

Gold bullion prices "also jumped to then record highs...buoyed by the emergence of the Greek sovereign crisis and US quantitative easing," says Steel, who reckons that "conditions are more bullish now...[as] policymakers appear to have more limited options".

President Obama walked out of budget talks with Republicans on Wednesday, suggesting politicians are no closer to agreeing a deal to raise the federal debt ceiling – which the US Treasury says it will hit on August 2.

Ratings agency Moody's announced earlier in the day that it has placed US government bonds on review for a possible downgrade – citing concerns that Congress may not agree to raise the $14.3 trillion federal limit.

"What we're looking for is a raising of the limit," said Steven Hess, senior credit officer at Moody's.
"It doesn’t matter the process that they get there."

Also in Washington on Wednesday, Federal Reserve chairman Ben Bernanke testified to the House of Representatives Financial Services Committee.

Any US default would be a "major crisis" and would "throw shockwaves through the entire global financial system", Bernanke told the committee.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support." 

Bernanke is due to testify to the Senate Banking Committee on Thursday.

Bernanke's comments left "the door ajar over QE3", says one gold bullion dealer here in London, referring to a potential third round of Fed quantitative easing.

"[This] reinforces the perception that the very low interest rate environment that has supported this leg of the precious metals rally will persist."

"The hurdle for QE3 is too high right now," counters Dana Saporta, New York-based economist at Credit Suisse.

"But if the European peripheral crisis intensifies, further policy accommodation might be considered."

"Even if the Fed does not provide additional QE, gold should be driven higher by liquidity created by government borrowing," says Marc Ground, commodities strategist at Standard Bank.
The US Dollar continued to fall against the Euro on Thursday, hitting €0.72 – a 2.8% drop in 48 hours.

Over in Europe, Eurozone members must "decide how they fundamentally wish to support Greece," according to a report published Wednesday by the International Monetary Fund.

"Comprehensive private sector involvement is appropriate, given the scale of financing needs and the desirability of burden sharing."

Ratings agency Fitch has downgraded Greek debt to CCC – joining Standard & Poor's and Moody's in giving Greece the lowest rating possible short of declaring it in default.

Officials from the European Central Bank and the European Commission were meeting with private creditors in Rome on Thursday to discuss a second Greek rescue package. Greece was bailed out last year to the tune of €110 billion.

Also in Rome, the Italian Treasury sold €1.25 billion of 5-Year government bonds Thursday morning  at a yield of 4.93% – the highest since 2008, and a full percentage point higher than the most recent 5-Year bond auction on June 14.

Italy's national debt is worth around 120% of its annual economic output.

The Euro price of gold bullion came close to €1125 per ounce Thursday morning – also a record, and a 9.8% rise in less than two weeks.

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.


© 2005-2019 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