Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

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.


© 2005-2019 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