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
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
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 Gains as Money Markets Have Almost Stopped Functioning

Commodities / Gold and Silver 2011 Sep 08, 2011 - 08:32 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion  prices rose to $1853 an ounce Thursday morning London time – 3.5% down on Tuesday's all-time high.

Major commodities fell while stocks and government bonds were slightly up, on a day which saw both the European Central Bank and the Bank of England leave monetary policy unchanged.


"Gold continues to trade in a wider and more volatile range," noted one London-based dealer this morning.

"Most sell orders are parked close to the $1900 level," added a gold bullion dealer in Singapore. 

"So long as we stay in the range of $1800 to $1900, the bullish trend is pretty much intact." 

On the downside, however, "a break of $1704 would confirm a double top is in place and would target $1488 on a measured move," reckon technical analysts at bullion bank Scotia Mocatta.

Prices for silver bullion meantime rose to hit $42.38 per ounce around lunchtime – a 4.5% move in less than 24 hours.

The European Central Bank left its main policy interest rate unchanged at 1.5% on Thursday. Jean-Claude Trichet is due to give his penultimate post-decision press briefing on Thursday afternoon, which will be watched for hints of where ECB policy might go next. 

"The debate in the markets has moved to rate cuts but I doubt it will happen," says Gilles Moec, co-chief European economist at Deutsche Bank in London.

"The situation is very, very bad, the money markets have almost stopped functioning."

The ECB has raised rates twice this year – in April and July – each time citing the risks of inflation.
Trichet's language at the press conference "will probably shift to neutral on inflation and downside risks to growth, which is enough to flag that the ECB is on hold," reckons former ECB economist Laurent Bilke, now at Nomura.

"It is very unlikely that the ECB would do a massive U-turn so soon...that is just not how it operates." 

"The experience of late 2008," counters Jacques Cailloux, chief European economist at Royal Bank of Scotland, "indicates that the ECB can change course very quickly."

In July 2008 he ECB raised its rate from 4.00% to 4.25%. Following the collapse of Lehman Brothers later that year, however, the ECB cut its rate seven times between October 2008 and May 2009, when it reached 1.00%.

Here in the UK, the Bank of England's Monetary Policy Committee voted Thursday to leave its interest rate at 0.5% – where it has been since March 2009. The MPC also voted to leave asset purchases at £200 – rather than increase them with a second round of quantitative easing.

"The time to launch QE2 has arrived...in order to avoid the risk of a double-dip recession," said Graeme Leach, chief economist at business lobby group the Institute of Directors, speaking before the announcement. 

Over in the US President Obama is due to give a speech on job creation later on Thursday, where he is expected to outline proposals worth around $300 billion in spending and tax cuts.

"We don't feel that the plan will be received by market participants as a cure for the US economy's problems," says Marc Ground, commodities strategist at Standard Bank.

"Consequently, the current optimism should prove to be short-lived, with a return of investors to safe-haven assets imminent...we feel sentiment will soon turn in favor of gold, as uncertainty and Eurozone concerns are reignited."

Shortly after taking office in January 2009 Obama announced a stimulus package worth around $800 billion. The American Recovery and Reinvestment Act became law the following month.

An estimated $710 billion in stimulus funds has been spent since, according to US government-run website recovery.gov. The unemployment rate for August was 9.1% – up from 7.8% when the stimulus package was first announced.

The Organisation for Economic Co-operation and Development announced Thursday that it has significantly reduced its global economic growth forecast.

"Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth going forward has gone up," said OECD chief economist Pier Carlo Padoan.

The OECD now thinks that G7 economies excluding Japan will grow at an annualized rate of less than 1% for the remainder of 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