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 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