Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
The Rise of Anti-Establishment Italy - 7th Dec 16
The Rise of Anti-Establishment Italy - 7th Dec 16
Trump Likely to Drive Another Bump in Stock Market Buybacks — Here’s How to Hedge - 7th Dec 16
World War II and the Origins of American Unease - 7th Dec 16
Online CFD Trading for Traders on a Budget - 7th Dec 16
Silver Bullion Price Buying Opportunity for 2017? - 7th Dec 16
The Imminent Multi-Trillion Dollar Surge In Social Security & Medicare Costs - 7th Dec 16
Gold Bullion Price Buying Opportunity for 2017? - 6th Dec 16
Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market - 6th Dec 16
THE Gold Play for 2017 - 6th Dec 16
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

Gold Breaches $1625, U.S. Credit Ratings Downgrade Now Almost Certain

Commodities / Gold and Silver 2011 Jul 27, 2011 - 07:56 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices hit a new intraday record high of $1625 an ounce in Wednesday's Asian trade – a 1.5% gain on Friday's close – before easing back slightly after London opened.

Stocks and commodities were down but US Treasury bonds rose, as the US Congress had to postpone a vote on the $14.3 trillion debt ceiling.


Insuring US debt against default in the next 12 months now costs investors more than for 5-year bonds on the credit default swap market.

The Chicago Mercantile Exchange has meantime introduced a 0.5% 'haircut' on US Treasury bills used as collateral. T-bills were previously considered risk-free.

Silver bullion prices also rose early Wednesday, hitting $41.22 per ounce – a 2.8% gain on last Friday – and remaining just below that level throughout the morning.

"Support [for gold] now appears strong at $1577, the April high," say technical analysts at gold bullion bank Scotia Mocatta.

"Overall, it is believed that market environment should remain favorable and positive technical momentum is likely to see gold test new highs in the near term," adds Swiss precious metals refiner MKS.

A vote on Republican House of Representatives speaker John Boehner's plan to cut the US deficit had to be postponed Wednesday – after the Congressional Budget Office found that his proposals would not actually produce the anticipated reductions in federal borrowing.

Congressional staff were "looking at options to rewrite the legislation" to meet Boehner's pledge, the speaker's spokesman Michael Steel said late on Tuesday.

Boehner's fellow Republicans have indicated that they may not support the final plan when it goes before the House – now due to happen on Thursday. 

Boehner says his plan will build on the principles of Cut, Cap and Balance – the bill, defeated in the Senate last week, which sought to enshrine a balanced budget in the US Constitution.

"The speaker's plan falls short of meeting these principles," Joseph Brettell, spokesman for the Cut, Cap and Balance Coalition – which comprises 100 campaign groups – said on Monday.

"We urge those who have signed the [Cut, Cap and Balance] pledge to oppose it and hold out for a better plan."

"If [Boehner's plan] goes down or isn't brought to the floor, you're at a stalemate, there is no clear path forward," says Chris Kruger, Washington-based political strategy analyst at MF Global.

The US Treasury has said it expects to hit the $14.3 trillion federal debt ceiling next Tuesday – although some analysts have said the US could still remain below that limit further into August.

"A debt hike is almost certain to be agreed before, or very soon after, the August 2nd deadline," reckons Steve Barrow, currency analyst at Standard Bank.

"Instead, the real issue is deficit reduction...[which is] more likely to cause a debt downgrade than a missed bond payment."

"I'm pretty certain that at least by one agency we're going to see a downgrade," adds Kathleen Gaffney, who co-manages the $21 billion Loomis Sayles Bond Fund in Boston.

Ratings agencies Moody's and Standard & Poor's have already put the US on review for a possible downgrade, with S&P saying earlier this month there is a 50% chance this will happen by the end of October.

One smaller ratings agency, Egan Jones – which appears on the Securities and Exchange Commission's list of "Nationally Recognized Statistical Rating Organizations" – has in fact already downgraded US government bonds this month, lowering their rating from AAA to AA+.

"We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP," the agency explained.

"If investor confidence in US government bonds wanes," says one gold bullion dealer here in London, "the resulting downward pressure on the Dollar should be bullish for Gold."

Away from the US debt ceiling impasse on Wednesday, politicians in Syria moved to ban anti-government demonstrations as continued unrest saw 21 protesters killed in the last 24 hours, according to Bloomberg.

Weaker-economy Eurozone bond prices meantime fell once again, driving interest rates for the Italian and Spanish governments sharply higher.

The government in Beijing, in contrast, saw the value of its overseas assets rise by 7% in the year to March, according State Administration of Foreign Exchange figures reported by China Daily.

SAFE revealed Tuesday that overall, the value of offshore assets owned by China – home to the world's second-largest private gold bullion market – stood at $4.4 trillion. The bulk of this, over $3 trillion, is held as reserve assets, which include foreign currencies, International Monetary Fund special drawing rights and gold bullion.

The 7% growth rate is slower than that published for year-end 2010. Back in May, SAFE reported the value of overseas assets had grown 19% compared with the end of 2009.

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.


© 2005-2016 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

Catching a Falling Financial Knife