Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Gold Picture Bullish as Rumors Spread of ECB Nuclear Option

Commodities / Gold and Silver 2011 Nov 10, 2011 - 08:00 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold prices rallied to $1772 an ounce Thursday morning London time – 1.7% below the week's high – while European stock markets also regained some ground as rumors spread that the European Central Bank might intervene in the debt crisis.

Silver prices climbed to just below $34 per ounce around lunchtime – 3.8% below this week's high – while commodities were mixed and major government bond prices fell.


Earlier in the day, gold prices fell throughout Thursday's Asian trade – hitting a low of $1754 per ounce, having risen to $1798 the day before.

"Flow wise we saw nothing but selling today," says one Hong Kong bullion dealer.

"Gold's flirtation with $1800 has ceased for the time being," adds a note from the London desk at Mitsui Precious Metals.

"The selling seems largely motivated by a need for cash to cover losses in equities," the notes adds, though it also points out that as gold prices rose by over $120 in ten days, "a correction is not entirely surprising". 

"The wider picture still looks bullish, however, so another test of $1,800 before the weekend is a strong possibility."

Italy's Treasury Department successfully auctioned €5 billion worth of 12-Month Treasury bills Thursday morning – paying an average yield of 6.087%, a Euro era high. At the last 12-month T-bill auction a month ago, the Treasury sold €7 billion worth at a 3.570% average yield.

Yields on 10-Year Italian bonds fell back below 7% this morning.

Demand at the auction was "solid", the Wall Street Journal reports – with the ECB buying Italian debt, according to a trader cited by the WSJ.

"In all likelihood...[policymakers] will have to try to find some sort of nuclear button to turn back the markets," says a note from Standard Bank analysts Steve Barrow and Jeremy Stevens this morning.

"[One thing that] could certainly work to end the crisis [would be] if the ECB promised to buy unlimited amounts of debt from the outset. Will it sign up to this? ECB members argue that such action is prohibited but...crises call for rule books to be ripped up and this is one rule that could become a casualty."

"The ECB will be drawn [in] like everyone else by the weight of gravity," agrees a Eurozone official quoted by Reuters.

However, "the situation has deteriorated so dramatically a large-scale asset buying by the ECB would not necessarily be a panacea," reckons Alberto Gallo, senior European credit strategist at Royal Bank of Scotland.

"I do not think the ECB on its own could bring back the market to the point before Italy succumbed."

Yields on 10-Year French government bonds meantime rose above 3.3% Wednesday morning – still below their one month high hit just before last month's Euro Summit.

However, the spread over 10-Year German bund yields hit a 21-year high at 154 basis points (1.54 percentage points).

"The contagion to core countries is already visible in France," reckons Gerard Moerman, head of rates and money markets at Aegon Asset Management, who manages €20 billion of assets.

"Lots of investors don't trust it anymore or want to get rid of the exposure...we've seen some of our clients wanting to leave France."

The world is in danger of a "lost decade" of stagnant economic growth, International Monetary Fund managing director Christine Lagarde told a forum in Beijing yesterday.

"If we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand." 

In Berlin meantime German chancellor Angela Merkel called for "a breakthrough to a new Europe".

"That will mean more Europe, not less Europe...a community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply cannot survive."

"If the leaders of the Eurozone want to save their currency," British prime minister David Cameron said Thursday, "then they – together with the institutions of the Eurozone – must act now. The longer the delay, the greater the danger."

Euro gold prices were flat throughout Thursday morning, zig-zagging either side of €1300 per ounce, as the Euro recovered some ground against the Dollar following yesterday's 2.2% drop.

"Looking at what is going on in Europe a further round of liquidation across commodities, including gold, is possible," warns Tom Kendall, precious metals research analyst at Credit Suisse.

Here in London, the Bank of England's Monetary Policy Committee voted Thursday to keep its interest rate o0n hold at 0.5% – where it has been since March 2009. The MPC also voted to maintain its quantitative easing program at £275 billion.

Over in the US, Jefferson County, Alabama, has filed for the largest municipal bankruptcy in US history, after country officials failed to reach agreement with creditors to refinance $3.1 billion of borrowing. The creditors – which include investment bank JP Morgan – bought bonds issued by Jefferson County in order to finance a sewer building project.

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