Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
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
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Gold Climbs as Euro Crisis Gets Worse Every Day

Commodities / Gold and Silver 2011 Nov 16, 2011 - 03:13 PM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleU.S. DOLLAR prices to buy gold climbed to $1779 an ounce Wednesday lunchtime in London – 0.5% down from last week's close –amid suggestions that central bankers in London and Frankfurt are growing more interventionist.

"Our strategic view remains unchanged," says Standard Bank commodities strategist Walter de Wet.
"Gold will push higher in 2012 with a target of $2000 in the first quarter of 2012."

Silver prices meantime traded in a tight range around $34.40 per ounce – 1% down on the week.

The European Central Bank was rumored to be buying European sovereign debt again this morning, after Tuesday saw sharp rises in yields on several Eurozone government bonds – including those of Belgium, France, Italy and Spain.

The ECB was "heavily in on Italy and Spain, 2-10 years," one trader told Reuters news agency.
Yields on Italian 10-Year bonds fell from 7.1% to below 6.8% at one point – although by lunchtime they were back above 7%.

Spanish 10-Year yields also dropped – though they too quickly rose again, breaching 6.3% again by the end of the morning.

Belgian and French bond yields followed similar patterns – a fall followed by a sharp rise – while the spread between 10-Year French and German yields set a new Euro era record at 191 basis points (1.91 percentage points).

"Each day that goes by the situation is getting worse," says Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi in London.

"There's unbelievably difficult decisions that lie ahead for Europe in terms of resolving this crisis."
Any solution to the crisis "has to be decided by national parliaments," Bundesbank president Jens Weidmann said Tuesday.

"Monetary policy cannot and must not solve solvency problems of states and banks...the participation of monetary policy for fiscal policy purposes must come to an end."

The price to buy gold in Euros held steady this morning around €1315 per ounce – a 1.1% gain for the week so far.

Here in the UK, inflation "is more likely to be below the [Bank of England's 2%] target than above it at the forecast horizon" according to the Bank's quarterly Inflation Report, published on Wednesday.

"The outlook for growth is unusually uncertain," the report notes, "reflecting in particular the exposure of the UK economy to developments in the Euro area."

"[The Bank] is so concerned about the escalating sovereign-debt crisis," says Philip Rush, UK economist at Nomura, "that the £25billion [quantitative easing] extension we originally penciled in for February no longer appears sufficient."

The Bank has kept its main interest rate at 0.5% since March 2009. Last month it expanded its asset purchasing program (QE) from £200 billion to £275 billion.

"We now expect £50bn of new gilt purchases to be announced in February and another £25billion in May," says Rush, adding that he does not expect the Bank to raise its interest rate until 2014.

The Bank has lowered its central growth forecast since August's Inflation Report and expects growth "to be broadly flat" over the next year at around 1%.

"Before the report, we expected more asset purchases in February," says Richard Barwell, UK economist at RBS.

"But December looks a hell of a lot more likely now. You look at these forecasts and think more is coming soon. And potentially a lot more."

Goldman Sachs and JPMorgan Chase have between them sold protection on over $5 trillion of debt worldwide, according to a Bloomberg report published Wednesday.

The two banks are heavily involved in the market for credit default swaps – which act as a form of bond insurance and are used by some traders to hedge their sovereign bond holdings.

Neither Goldman nor JPMorgan have revealed how much of the outstanding debt protection relates to Eurozone government debt.

Over in China, jewelry retailers are reducing the counter space given to platinum jewelry in order to allow more customers to buy gold, according to the Platinum 2011 Interim Review, published by leading refinery Johnson Matthey.

"Gold jewelry has been in great demand due to the rising price of gold and the perception of gold as a store of value," the report says.

"The Chinese have stayed faithful to the yellow metal," says the latest update from precious metals group Heraeus, noting a strong rise in the numbers choosing to buy gold bars in China.

"Contrary to demand for bars, jewelry demand has shown no growth [in recent years], but at the same time, despite higher prices, it has not gone down either."

By Ben Traynor

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 - 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