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 Eurozone Banks Worry about Counterparty Risks

Commodities / Gold and Silver 2011 Sep 06, 2011 - 08:34 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleU.S. DOLLAR prices to buy gold fell to a low of $1877 an ounce on Tuesday morning in London – a 2.3% drop from their new record high set hours earlier – while stocks and the Euro rallied after the Swiss National Bank announced plans to peg its currency to the Euro.

Yields on 10-Year US Treasury bonds hit an all-time low of 1.97% – while yields on Italian and Greek debt moved the other way.

Prices to buy silver meantime dropped to $41.87 – a 3.2% drop from Friday's close.

"Markets are concerned that steps taken by Eurozone leaders to address the problems engulfing some of Europe's smaller economies are insufficient," says one gold bullion dealer here in London.

"Europe has the capacity to drive gold higher," adds Darren Heathcote, head of trading at Investec.

The Swiss National Bank announced Tuesday that will peg the Swiss Franc to the Euro – citing once again the "massive overvaluation" of the Franc – as it aims for a "substantial and sustained weakening" of its currency.

The Franc will be pegged to the Euro at a rate of one Euro to SFr1.20 or more.

"The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities," read a statement from the central bank.

"If the economic outlook and deflationary risks so require, the SNB will take further measures."

Swiss consumer price inflation fell to 0.2% per year last month – down from 0.5% in July – according to official figures published this morning.

The Swiss Franc price to buy gold jumped 7.1% to a record high of SFr 1620 per ounce immediately following Tuesday morning's announcement. The gold price in Swiss Francs is now showing a 22% gain for the year so far.

Elsewhere in Europe, growth in the Eurozone slowed to 1.6% in the second quarter – down from 2.5% in Q1 – according to data released this morning. 

Politicians in Rome will today begin debating Italy's austerity package – while the country's largest union has begun a nationwide strike in protest at proposed measures.

Last week Italian prime minister Silvio Berlusconi abandoned plans for a so-called 'solidarity tax' on high earners.

"The Italian government appears to be in some disarray," says Goldman Sachs Asset Management chairman Jim O'Neill.

"[Already] it has backtracked on some of the more unpopular measures." 

A sell-off of Italian government bonds saw benchmark 10-year yields breach 5.6% this morning –their highest level since the European Central Bank began buying Spanish and Italian bonds on 8 August.

Greek sovereign bonds meantime saw yields rise to all-time highs. The 10-Year rate hit a record high of 19.4%, with the yield on 2-Year bonds breaching 50%.

"The consensus seems to be that the second bailout package for Greece might be obsolete before it has been put into law," explains Michael Leister, London-based fixed-income strategist at German bank WestLB.

"The ECB is having a hard time stabilizing these markets. The pressure is rising."

A note published Tuesday by UBS argues that "the Euro should not exist."

"With its current structure and current membership...[the] Euro creates more economic costs than benefits for at least some of its members – a fact that has become painfully obvious."

Eurozone banks deposited €166.85 billion overnight with the ECB – the highest overnight level in more than two years – the central bank announced Tuesday morning.

"Banks that would normally lend to each other would rather deposit money at the ECB because they are worried about counterparty risk," says Don Smith, economist at interdealer brokers Icap.

"When you buy gold," renowned investor and publisher of the Gloom Boom & Doom Report Marc Faber said Monday, "it's an insurance against systematic failure and problems in the financial markets. I'd buy every month a little bit of gold."

By Ben Traynor

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 - 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