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
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 Dips as Germany and ECB Dragged Towards Shock and Awe

Commodities / Gold and Silver 2011 Aug 05, 2011 - 09:59 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices fell to $1655 an ounce Friday lunchtime London time – 1.6% off the latest all-time high set the previous day – following the release of better-than-expected US employment data.

Stock markets bounced after nonfarm payrolls data showed the US economy added 117,000 jobs last month. The US unemployment meantime rate fell slightly to 9.1%.


Stocks and commodities remain down for the week, however, following more heavy selling Thursday after noon and Friday morning, as central bank intervention failed to quell investor fears over sovereign debt problems.

Silver prices meantime drifted down to around $39 per ounce by lunchtime – following a sharp sell-off on Thursday which saw silver lose nearly 6% in the space of an hour.

Gold bullion prices set fresh records at Thursday afternoon's London Fix in all three currencies – the Dollar, Pound and Euro.

Going into the weekend, gold bullion prices were up around 1.7% for the week by Friday lunchtime, while the price of silver bullion was down 2.2%.

"Despite[gold appearing] overbought [by]technical indicators, the threats of a US [credit rating] downgrade and default by one or more EU nation suggests that gains will continue, with $1700 the next upside target," said Swiss gold bullion refiner MKS on Thursday.

"A persistently negative economic outlook," added one gold bullion dealer here in London this morning, "could accelerate the so-called flight to quality that has been pushing gold higher." 

The European Central Bank re-entered the bond markets on Thursday for the first time since March – despite opposition from Germany's Bundesbank. The ECB's bond purchases were limited to Portuguese and Irish government bonds, according to traders.

"The ECB is being dragged unwillingly back to the table, having tried originally to palm off responsibility for restructuring the Eurozone to governments," says Peter Dixon, economist at Commerzbank in London.

"If the ECB is serious about playing its part in holding the Eurozone together, then it's going to have to spend a considerable sum."

"Ultimately," says Royal Bank of Scotland economist Jacques Cailloux, "a 'shock and awe' response [from the ECB] will take place, but only after further market deterioration."

Eurozone leaders did grant bond-buying powers to the European Financial Stability Facility – the €440 billion Eurozone bailout mechanism set up last year – on July 21 as part of the Greek rescue deal. 

However, the EFSF will not receive its new powers until the relevant legislation is drafted and passed by national parliaments. This is not expected to happen until mid-September at the earliest.

Eurozone leaders must "accelerate the approval procedures...so as to make the EFSF enhancements operational very soon," European Commission president José Manuel Barroso said in a letter to European governments on Thursday, adding that the crisis is "no longer...just in the Euro-area periphery".

France and Germany announced Thursday evening that French president Nicolas Sarkozy and German chancellor Angela Merkel will hold a conference call today with Spain's prime minister José Zapatero to agree a co-ordinated crisis response. 

The yield on both Spanish and Italian 10-Year governments bonds remained above 6% Friday morning – compared to 2.32% on German bunds. The yield on 10-year French bonds, meantime, was 3.19%.

Spain and Italy may have to drop out of financing earlier bailouts of Greece, Ireland and Portugal if their borrowing costs continue to rise – while some fear France could follow – reports this Saturday's edition of the Economist.

"Germany's position," warns Barclays Capital economist Julian Callow "appears to be that since it comprises 27% of Euro area GDP, it is not large enough to single-handedly rescue the Euro."

German industrial production fell 1.1% during June, according to figures published Friday.

Silver and gold bullion prices are "well supported by concerns over strength of the global recovery and renewed focus on fiscal problems in Europe," says Marc Ground, commodities strategist at Standard Bank.

Over in New York, the Bank of New York Mellon announced Thursday that it will start charging some institutional clients for holding their money – in effect imposing negative nominal interest rates on some deposits.

BNY Mellon says it has received "sudden, significant increases" in cash deposits, which it blames on market uncertainty.

"Past history shows us that once the storm passes these deposits quickly return to markets. The transient nature of these deposits prevents us from investing [them] to cover the costs from regulatory and deposit insurance."

The charge – equivalent to 0.13% per year – will affect clients whose deposits average over $50 million in one month, and where this amount is not "consistent with prior averages".

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