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
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Falls as Obama Calls for Gang of Six to Talk Turkey on Deficit Reduction

Commodities / Gold and Silver 2011 Jul 20, 2011 - 07:16 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR prices to buy gold fell Wednesday morning London time, dropping below $1584 per ounce – a 1.5% drop from the previous day's all-time high – while stock and commodity markets continued to recover after losing ground for much of the last week.

US Treasury bonds dipped despite President Obama's endorsement of a deficit reduction plan crafted by a so-called "Gang of Six" US senators.


Beijing today called on the US to act responsibly. China also repeated its assertion that it has no large scale plans to use its foreign exchange reserves to buy gold.

"Slips [in the price to buy gold] should find support around the previous all-time high, made in May around $1577.50, or along the breached May to-July resistance line at "1549.07," says Axel Rudolph, senior technical analyst at Commerzbank.

"Only a close [on Wednesday] below $1577 will introduce a deeper correction," agreed technical analysts at bullion bank Scotia Mocatta.

The price to buy silver also fell Wednesday morning, hitting $38.38 per ounce – 2.3% down for the week so far.

President Obama on Tuesday endorsed a bipartisan deficit plan by a so-called "Gang of Six" US senators, describing it as "very significant step".

"We're in the 11th hour and we don't have a lot more time left," said Obama, adding that it was time for congressional leaders to "start talking turkey". The US Treasury says it will hit the $14.3 trillion debt ceiling on August 2. Obama wants Congress to raise it to $16.8 trillion.

Obama's comments were something "the market could hang onto," says James Steel, precious metals analyst at HSBC.

"The [gold] market had gotten very long and it did begin to steady out over $1600...we haven't seen heavy fresh selling."

Few details of the "Gang of Six" plan have emerged so far. News agency Reuters reported on Wednesday that the senators envision $3.75 trillion of savings spread over 10 years. By comparison, the Congressional Budget Office has forecast the total deficit for 2011 will be around $1.5 trillion.

The Republican-controlled House on Representatives meantime passed the so-called Cut, Cap and Balance Act on Tuesday – which calls for balanced federal budgets to be enshrined in the US Constitution before the debt ceiling can be raised. 

The bill is expected to fail in the Senate, and Obama has said he would not sign it into law.

"We hope the US government will take responsible policies and measures to boost global financial market confidence and respect and protect the interests of investors," said a statement from China's State Administration of Foreign Exchange on Wednesday.

SAFE also played down the extent to which it might buy gold and other commodities with some of its $3.2 trillion of foreign exchange reserves – repeating its line that doing so would hurt Chinese consumers.

"Chinese companies and households consume a large amount of gold and crude oil...we could push up market prices, which may affect our people's consumption and economic development."

Here in Europe meantime, German chancellor Angela Merkel said Tuesday that this week's emergency European Union summit on Greece will not be "one spectacular event which solves everything."

Eurozone ministers are due to meet in Brussels on Thursday to discuss options for second Greek rescue – following last year's €110 billion bailout.

One option under consideration involves using the European Financial Stability Facility – the Eurozone's €440 billion temporary bailout mechanism – to buy back sovereign bonds on the open market.

"Much uncertainty remains ahead of the European Union leaders' summit," says Andrey Kryuchenkov, London-based analyst at VTB Capital, who adds that persistent uncertainty is likely to keep the market to buy gold "underpinned".

"Any correction is unlikely to be extended for long."

"It seems unlikely that any real resolution can be found to this issue on this occasion," adds one gold bullion dealer here in London.

"The prospect is there for more buying of gold by risk-averse European investors." 

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