Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Hottest Sports Stock Of 2020 - 23rd Sep 19
Stocks Wedge At The Edge – Front And Center - 23rd Sep 19
Stock Market Top Almost Confirmed - 23rd Sep 19
Thomas Cook COLLAPSE! 300,000 Passengers Stranded, Flights Cancelled, Planes Grounded - 23rd Sep 19
Massive Stock Market Price Reversion May Be Days or Weeks Away - 22nd Sep 19
How Russia Seized Control of the Uranium Market - 22nd Sep 19
Dow Stock Market Trend Forecast Update - 21st Sep 19
Is Stock Market Price Revaluation Event About To Happen? - 21st Sep 19
Gold Leads, Will the Rest Follow? - 21st Sep 19
Are Cowboys Really Dreaming of... Electric Trucks? - 21st Sep 19
Gold among Negative-Yielding Bonds - 20th Sep 19
Panicky Fed Flooding Overnight Markets with Cash - 20th Sep 19
Uber Stock Price Will Crash on November 6 - 20th Sep 19
Semiconductor Stocks Sector Market & Economic Leader - 20th Sep 19
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19

Market Oracle FREE Newsletter

How to Invest in the Esports Revolution

Stock Markets Slide Despite Central Banks $110 billion Action - Gold Safehaven

Commodities / Gold & Silver Dec 13, 2007 - 10:17 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES drifted lower from yesterday's two-week highs early Thursday, recording an AM Fix in London of $809 per ounce as global stock markets fell hard despite Wednesday's attempt by five of the world's biggest central banks to ease pressure in world money markets. London's FTSE100 index lost 1.3% at the opening while US government bonds reversed Wednesday's three-year record sell off, pushing the yield on two-year Treasuries 3 pips lower to 3.10%.

Hong Kong equities sank 2.7% while Tokyo 's Nikkei index closed 2.5% lower.

Gold futures rose at Japan 's Tocom exchange, meantime, taking the Oct. '08 contract 1.2% higher to equal $817 per ounce.

"We continue to look for an opportunity to get tactically long gold again but need to see speculative positioning reduced and jewelry demand return," says John Reade, head of metals trading at UBS.

"A nice double top has formed after the reaction from the resistance level at the old 1980 high" of $835 per ounce, counters Phil Smith for Reuters India, "but the Gold Market needs a break down to around $770 to confirm its completion."

On the currency markets this morning the Yen recovered from Wednesday's one-month lows vs. the Dollar, while the Euro slipped back to the bottom of its one-week uptrend, dropping half-a-cent to $1.4690.

That kept the Gold Price in Euros above €550.50 per ounce. British investors wanting to Buy Gold today saw the price hold above £396 per ounce as the Pound Sterling slid one cent from yesterday's top to $2.0417 on news that UK house prices fell for the fourth month running in Nov., with 41% of chartered surveyors reporting lower prices vs. 23% saying prices are still gaining.

Crude oil prices today ticked lower from Wednesday's 4.9% jump to $94.39 per barrel, but wheat futures pushed higher after the US Dept. of Agriculture cut its forecast for US stockpiles ahead of next June's harvest by 10%.

Soybean prices rose for the fifth session running to reach a new 34-year high, while analysts at J.P.Morgan today raised their forecast for average Gold Prices in 2008 from $716 to $814 per ounce.

"With the impact of the sub-prime issue in the United States continuing to unfold, gold's safe haven status has once again come to the fore," the bank said in a research note.

"Looking out to next year, we expect strong demand from India , China and the Middle East to remain positive for gold."

Wednesday's co-ordinated press releases from six of the world's major central banks – led by the US Federal Reserve – were "an admission of failure [with] an ad hoc quality to them," says the Times of London today.

"The formal mechanisms that might have made for an earlier and more elegant execution of policy do not exist at present. This is part of a much broader challenge to the governance of the world: the inadequacy of old institutions to deal with new realities."

The plan aims to remove the stigma of borrowing short-term funds from the Bank of England – currently struggling to rescue Northern Rock, the over-geared UK mortgage lender that suffered Britain 's first banking run in more than 130 years after appealing to the BoE for emergency funds in Sept.

Rather than lending short-term funds at a penal rate of interest 1% above its key base rate, the Bank of England will now offer £23 billion ($47bn) across two open auctions with no minimum bid. In return, the Bank will accept lower-grade investment bonds as collateral.

The plan also sees the US Federal Reserve move to inject Dollar-liquidity into Europe 's money markets by lending $24 billion to the European Central Bank (ECB) in Frankfurt and Swiss National Bank (SNB) in Geneva via a currency swap.

"While more money slushing around the banking system will alleviate the liquidity issues, it also means more spending power, and with it the potential for inflation and higher Gold Prices ," says Investec Australia today.

The bank's analysts cut back their forecast of a $30 gain by year-end, however, because "this move by the central banks should help ease some of the tensions in the credit markets. Hence investors will be less likely now to be driven into gold for safe-haven reasons."

But growing pressures on the world's biggest banks and financial institutions remain. Japan 's second-largest bank, Mitsubishi UFJ, today lost 7.9% on the Tokyo stock exchange, while the fourth largest bank – Sumitomo Mitsui Financial – sank by 7.3%.

In the United States , Bank of America warned yesterday of "disappointing" results for the fourth-quarter, while PNC – Pennsylvania 's largest bank – marked down $1.5 billion in mortgage losses.

Wachovia, the fourth largest bank in the US, said that its writedowns since the start of October already outstrip the $1.3 billion written off during the third quarter, while in Europe, the ECB said in a separate report that the region's 21 biggest banks now hold €244 billion ($359bn) in off-balance sheet assets that threatening "a credit crunch in the wider economy" if they can't be refinanced with new interbank loans.

Dismissing yesterday's central-bank announcements, "the Fed's actions are not going to be enough to prevent the situation from deteriorating," reckons Koichi Kurose, chief strategist for the $160bn Resona Trust & Banking Co. in Tokyo .

"Further investment losses are very probable and we've got to be cautious about the earnings of financial companies."

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2007

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.

Adrian Ash Archive

© 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

6 Critical Money Making Rules