Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold at $1600 as Fed Plans for US debt Default and "Euro Gravediggers" Meet in Brussels 

Commodities / Gold and Silver 2011 Jul 21, 2011 - 09:26 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices hovered around $1600 an ounce Thursday morning London time – 0.6% off Tuesday's all-time high – as stocks and commodities dropped ahead of the European Union's latest emergency summit on Greece.

Silver prices traded in a tight range around $39.90 per ounce – 1.6% up for the week so far.


"It seems unlikely that any real resolution can be found to [the Greek] issue on this occasion," says Swiss gold bullion refiner MKS.

"Sovereign debt concerns in the Eurozone and US should continue to dominate precious metals, with uncertainty keeping investors interested in the safe-haven advantages of the complex," agrees Marc Ground, commodities strategist at Standard Bank.

The Euro gold bullion price whipped violently this morning – hitting €1131 per ounce as European Union leaders were arriving at the emergency meeting in Brussels, before falling 1.2% to €1117 around lunchtime.

France and Germany have agreed a common position – after speaking on Wednesday with European Central Bank president Jean-Claude Trichet – press reports said, with the details to be unveiled at the meeting.

The Financial Times suggested that the joint proposal could include €71 billion in loans and €50 billion raised from a Eurozone bank tax. The bank tax proceeds could then be used to buy back around 20% of Greece's €350 billion of outstanding debt.

However, "I don't think there will be an agreement on that," said Jean-Claude Juncker, chairman of the Eurozone finance ministers, adding that selective default by Greece could not be ruled out.

The Wall Street Journal, meantime reported that a deal could involve inviting creditors to exchange their bonds for new 30-Year bonds.

Trichet has previously said the ECB will not accept defaulted bonds as collateral – while Germany has pushed for private creditors to take losses as part of a new rescue deal.

"A haircut of around 50% of outstanding bonds should be targeted," Germany's council of independent economic advisors said Tuesday.

"There [also] needs to be a joint guarantee for all outstanding [Eurozone] debt," Peter Bofinger, one of the Council's members, said Thursday, warning of "the abyss of a major speculative attack on Italy."

"[But] the consequences of this [Eurobond] policy will strangle Germany," said former ECB chief economist and Bundesbank board member Otmar Issing earlier this week, and anyone promoting it "will prove to be the Euro's gravediggers."

"With expectations for the [Brussels] meeting low, any positive outcome today would be gold-negative," says Edel Tully, precious metals strategist at UBS.

"But unless EU leaders come up with a credible plan that addresses not only Greece but also the threat of contagion to Italy and Spain as well, any dip in gold will likely be short-lived."

Data published Thursday showed signs of a slowdown in Eurozone economic activity. Germany's composite purchasing manager's index fell from 56.3 last month to 52.2 – its largest one-month fall since the end of 2008, and "a bit of a worry," says Commerzbank economist Peter Dixon.

"The resolution to the crisis is going to be heavily dependent on a strong Germany."

Across the Atlantic meantime US President Obama may be open to a short-term deal, said the White House, on raising the $14.3 trillion debt ceiling as a way of buying time for something bigger.

The US Federal Reserve however is actively planning for a US default, news agency Reuters said on Thursday. A default on US Treasury bonds could occur if the ceiling is not raised by August 2 – the date on which the Treasury expects to hit it.

"We are in contingency planning mode," Philadelphia Fed president Charles Plosser told Reuters.
Plosser notes that a US default would raise questions over the Fed's lending to banks – which post US Treasury bonds as collateral.

"Do we treat them as if they didn't default, in which case we would be saying we are pretending it never happened? Or do we treat them as if they defaulted and don't lend against them?"

Over in China, the world's second-largest gold bullion market, HSBC's preliminary PMI fell from 50.1 last month to 48.9 – its lowest level since March 2009.

"We think the weak reading reflects seasonal factors as industrial activities tend to slow in the summer," says a note from Barclays Capital.

BarCap also notes that the figure may policy tightening earlier in the year.

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