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 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