Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bank of England Gives "Systemic Crisis" Warning, Merkel says Eurozone "Will Take Years" to Solve Debt Problem

Commodities / Gold and Silver 2011 Dec 02, 2011 - 07:19 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S.DOLLAR Gold Bullion prices eased back from a week's high of $1760 an ounce Friday lunchtime in London – straight after the publication of US jobs data – before appearing to bounce off $1750.

Silver prices also fell back, after hitting a week's high of $33.67 per ounce.


Nonfarm payroll data published by the US Bureau of Labor Statistics Friday show that the US economy added 120,000 jobs in November – exactly in line with market expectations.

The US unemployment rate meantime fell to 8.6% - down from 9.0% in October.

Stock markets opened strongly on Friday morning – with the FTSE 100 in London up around 1.6% by lunchtime and Germany's DAX gaining 2.0% – while commodities also gained and US Treasury bond prices fell.

"Recent US data have been slightly more optimistic than what has been factored into the market," said Neil Jones, London-based head of European hedge-fund sales at Mizuho Corporate Bank, speaking before the nonfarm payroll release.

"That's helping risk...the market is in the process of reducing its risk-off positions."

Despite its slight drop following the nonfarm release, gold bullion looked on course for its biggest weekly gain since October – having risen nearly 4% since last week's close.

"The market is betting on some kind of announcement from Europe," reckons Saxo Bank analyst Ole Hansen.

"[Investors are] looking for the liquidity button in Europe to be pressed. That will mean high inflation, and that is giving gold the impetus it has been lacking of late."

German chancellor Angela Merkel however, in a speech to the Bundestag this morning, repeated her objection to the notion that the European Central Bank might follow the Bank of England and the Federal Reserve by embarking on quantitative easing.

"The European Central Bank has a different task from that of the US Fed or the Bank of England," Merkel said, adding that resolving the Eurozone crisis "is a process and this process will take years."

Merkel also again rejected the idea of jointly-issued 'Eurobonds'. European Union leaders are due to meet next Friday to discuss their next steps. 

Elsewhere in Germany, bakery chain Wiener Feinbaecker is advertising a 5-Year bond at 7%, the Financial Times reports – noting that it is an "eloquent sign" that we could be entering another credit crunch.

"When a thriving business with profits growing at 30% a year resorts to this kind of financing, it is a pretty sure sign that banks are not fulfilling their traditional role," the FT report says.

Bank of England governor Mervyn King yesterday warned banks to prepare for a "systemic crisis".

"An erosion of confidence, lower asset prices and tighter credit conditions are further damaging the prospects for economic activity and will affect the ability of companies, households and governments to repay their debts," he said.

Banks should "give serious consideration to raising external capital in the coming months" warned the BoE's Financial Stability Report yesterday. The report suggests that one way banks could boost cash reserves is reduce the amount they pay in dividends and bonuses.

Although the report encouraged banks "to improve the resilience of their balance sheets", it also cautioned against "exacerbating market fragility or reducing lending to the real economy".

A closely-watched indicator of banking system stress is the gap (or spread) between the London Inter-Bank Offered Rate (the rate at which banks lend to other banks) and the Overnight Index Swap rate (determined with reference to a published overnight rate such as the Federal Reserve's federal funds rate).

Since the start of August, the 3-Month LIBOR-OIS spread has risen from around 12 basis points (0.12 percentage points) to more than 42 basis points. It remains, however, significantly below the levels reached immediately following the Lehman's collapse, when a credit market seize-up sent 3-Month LIBOR-OIS above 350 bps.

Korea's central bank bought 15 tonnes of gold bullion last month – adding to the 25 tonnes it bought earlier in the year.

The Bank of Korea added to its gold bullion reserves "in a bid to diversify its portfolio of foreign exchange reserves," said Lee Jung, head of investment strategy for the BoK's Reserve Management Group.

 "South Korea has huge reserves," says Arne Lohmann Rasmussen, head of rates, foreign-exchange and commodities strategy at Danske Bank.

"When they are buying gold, it's supportive for the market."

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.


© 2005-2022 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