Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
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

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold Touches $1600 on Huge Physical Demand, Market Fears Sovereign Debt Downgrades

Commodities / Gold and Silver 2011 Dec 16, 2011 - 09:17 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleSPOT MARKET gold prices briefly touched $1600 an ounce Friday lunchtime in London – 2.3% up on this week's lows – while stocks and commodities were broadly flat compared to Thursday's closing prices.

"Physical market demand continues to improve," says Walter de Wet, commodities strategist at Standard Bank.


"The demand is not stellar, but much stronger than a week ago."

"We saw huge physical demand [on Friday] from Thailand and Indonesia," adds one dealer in Singapore.

"But there isn't much demand from India, mainly because the Rupee is very weak."

Silver prices rose to $29.96 per ounce – still 7.0% down on last week's close – while on the currency markets the Euro rallied against the Dollar despite fears that Eurozone government downgrades may be imminent.

Heading into the weekend, Dollar gold prices were down 6.9% for the week. Based on gold prices at the afternoon London Fix, the last time gold fell further in one week was the first week of December 2008.

Bigger Friday-to-Friday falls were seen in October of that year. Today's London Fix would have to come in below $1488.75 per ounce to surpass the 12.9% weekly drop in gold prices seen in the week ended 17 October 2008.

Nevertheless, net outflows saw the volume of gold bullion held to back shares in the SPDR Gold Trust (ticker: GLD) – the world's largest gold ETF – fall yesterday by nearly 15 tonnes to just under 1280 tonnes, the biggest one day outflow by volume since August this year.

"Bears are in the driver seat," says Miguel Perez-Santalla, New York-based vice president of sales at Heraeus Precious Metals Management.

"But the problems in Europe have not been solved and buying will come back and we will see higher prices because of a lack of confidence in the financial system."

"Could Eurozone sovereign ratings be cut as early as this evening?" asks this morning's note from Standard Bank currency analysts Steve Barrow and Jeremy Stevens.

Ratings agency Standard & Poor's last week announced it had placed every country in the Eurozone on CreditWatch negative, stating that Eurozone governments have demonstrated they "are not prepared to act collectively in a way that convinces markets".

"This sounds to us very reminiscent of the warning S&P gave to the US government ahead of the August 2 debt ceiling deadline," note Barrow and Stevens.

"The US had its AAA rating taken down to AA+ a few days later. Notably the rating cut occurred late on Friday August 6, after the markets had closed."

The potential downgrade of France – which is currently rated AAA – "does not seem justified based on economic fundamentals," Bank of France governor Christian Noyer said Thursday.

"Or if it is, they should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing."

"It is true," agreed French finance minister Francois Baroin today, "that the economic situation in Britain is very worrying today and one prefers to be French than British at the moment on the economic level."

"If the international community doesn't work together," International Monetary Fund chief Christine Lagarde warned last night, "[it risks] retraction, rising protectionism, isolation...this is exactly the description of what happened in the Thirties and what followed is not something we are looking forward to."

Lagarde added that the Eurozone crisis "is not a crisis that will be resolved by one group of countries taking action".

"It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action."

European Central Bank president Mario Draghi meantime has repeated that the ECB's program of buying government bonds – which is said to be capped at €20 billion per week – is "neither eternal nor infinite."

In a speech given in Berlin yesterday, Draghi also said a "firewall" to prevent contagion across different sovereign debt markets "will be in place and can be activated when needed subject to proper conditionality".

Eurozone leaders have agreed to "assess the adequacy of the firewall by next March," he added.

Ratings agency Fitch meantime has cut the credit ratings of seven major banks. Bank of America, Citigroup and Goldman Sachs have been downgraded by one notch from A+ to A. Barclays, BNP Paribas, Credit Suisse and Deutsche Bank have all been cut by two notches from AA– to A.

"With access to liquidity being constrained, market participants have increasing problems to refinance," says a note from Credit Suisse researchers.

"As a result they have to sell their assets – including precious metals – to raise the much needed cash. This is the main reason why gold prices fall on days of increasing funding stress."

Over in the US, the House of Representatives is due to vote today on a spending bill agreed last night that, if approved, will avert a shutdown of government agencies.

Negotiations continue meantime on a separate deal to extend unemployment benefits and a payroll tax cut.

"Congress should not and cannot go on vacation before they have made sure that working families aren't seeing their taxes go up by $1,000 and those who are out there looking for work don't see their unemployment insurance expire," US president Barack Obama said Thursday.

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