Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Surprising Gold Rally despite Vulnerability on Futures Market

Commodities / Gold and Silver 2011 Oct 03, 2011 - 08:46 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices began the week strongly, climbing to $1663 per ounce Monday morning London time – a 2.4% gain on Friday's close – while stocks and commodities fell and government bonds rose following news that Greece's second bailout agreed less than three months ago is unlikely to be enough.

Silver bullion prices also rose, climbing to $31.43 per ounce – 4.9% above where they ended last week.


"Surprisingly gold and silver has been rallying in a very thin market," said one Hong Kong bullion dealer this morning.

"If there is no more fund liquidation in the beginning of a new quarter, and given that doomsday is just a few weeks from us, is the safe haven property of precious metals back in fashion again?"

The net long position of bullish minus bearish contracts held by noncommercial – so-called speculative – gold futures and options traders on New York's Comex exchange fell by more than 20% in the week ended September 27, according to data published Friday by the US Commodity Futures Trading Commission.

Speculative net longs fell to 158,754 100-ounce contracts – the lowest level since May 2009, and equivalent to 494 tonnes of gold bullion – as the number of short positions rose while long positions decreased.

"The continuation of the decline in speculative longs indicates the increased caution with which participants are approaching the gold market," says Marc Ground, commodities strategist at Standard Bank.

"Taken together with the increase in speculative shorts – which are currently at relatively high levels – gold appears to have returned to the vulnerability of several weeks ago."

As a percentage of all open interest, speculative net longs fell to 19.2% – the lowest level since the week ended 18 November 2008, when the figure was 12.3%. The price of gold bullion at the PM London Fix that day was $738 per ounce – it has not been lower since.

The gross tonnage of gold held to back shares in the SPDR Gold Trust (ticker GLD) – the world's largest gold ETF – also fell last week, following a sharp rise that started towards the end of August.

The GLD held just under 1232 tonnes of gold on Friday – down from 1252 tonnes a week before.

"The continued mix of default fears and economic slowdown are likely to trigger further pockets of cash generating long liquidation," warns a note from Swiss gold bullion refiner MKS.

Despite the outflows, Friday's GLD holdings were less than one tonne below the amount held on 6 September, the day the gold price hit its all-time intraday high of $1920 per ounce.

"To be clear, physical demand right now is not just decent, it is exceptionally strong," noted UBS precious metals strategist Edel Tully last week.

The CFTC data also show a sharp drop in speculative net long silver positions – together with a corresponding fall in net short positions held by commercial traders (including miners, refiners and bullion banks) who take the other side of that trade.

In Europe meantime, the Greek government announced Sunday that it expects to miss deficit targets agreed earlier this year with its 'troika' of creditors – the European Central Bank, European Union and International Monetary Fund – despite announcing fresh austerity measures.

Greece now expects its deficit is to be 8.5% for 2011 – compared to the 7.6% forecast on which a second bailout worth €109 billion was agreed in July.

"Greece is bankrupt," says Michael Fuchs, deputy parliamentary floor leader for Chancellor Merkel's Christian Democratic Union party.

"Probably there is no other way for us other than to accept at least a 50% forgiveness of its debts."
Private sector banks agreed in July to accept a 21% write-down in the value of their Greek debt holdings.

"I am warning in the most forceful way against any material revision [of July's agreement]," said Deutsche Bank chairman Josef Ackermann on Sunday.

Ackerman is also head of the International Institute of Finance, which agreed the terms under which private creditors would undertake a bond swap.

"If we reopen the voluntary accord of July 21, we will not only lose precious time but quite possibly also private investor support...the impact of such a move will be incalculable."

Over in China meantime – the world's second-largest source of private gold bullion demand – manufacturing growth accelerated in September, according to official data published Saturday. 

China's purchasing managers index (manufacturing) rose to 51.2 – up from 50.9 for August (a figure above 50 indicates sector expansion).

Here in Europe, data published today show German manufacturing grew slightly last month, with PMI rising to 50.3 from 50.0 last month. 

For the Eurozone as a whole, however, manufacturing activity continued to contract, with the PMI coming in at 48.5 – down from 49.0 in August. Here in the UK, manufacturing PMI rose to 51.1 – up from 49.4 for August.

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

6 Critical Money Making Rules