Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15
Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - 28th June 15
Investor Stock Play for Two Growing Missile Threats - 28th June 15
Stock Market Uptrend/downtrend Inflection Point - 27th June 15
Greece Crisis OXI - 27th June 15
Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - 27th June 15
It’s Time to Change the Way You Look at Disney Forever - 27th June 15
Flatline Investing and Dead End Debt Schemes - 27th June 15
Stock Market Investors Avoid the "Herd" Like the Plague - 26th June 15
Extreme Gold/Silver Shorting - 26th June 15
USD Daily, Weekly, Monthly & Conclusions - 26th June 15
Gold Price Target of USD 2,300 - 26th June 15
Gold and Silver - Another Successful Option Expiration For the Insiders - 26th June 15
Why Buffett Bet A Billion On Solar Energy - 26th June 15
Fed Taper Talk, And The $10 Bill - 25th June 15
When a Bond Is Not a Bond - 25th June 15
Nature Rebounds - Trends in America Portend a Global Restoration of Nature - 25th June 15
Stocks That Profit... Even When You're Dead Wrong - 25th June 15
When Will US Debt Hit the Wall? - 25th June 15
Ron Paul Warns “They Can’t Print Money Forever” - 25th June 15
In Gold We Trust 2015: Gold Remains In A Secular Bull Market - 25th June 15
European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - 25th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

Gold Escapes Bearish Channel and Heads for Weekly Gain

Commodities / Gold and Silver 2012 Apr 13, 2012 - 12:36 PM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR prices to buy gold traded sideways just below $1680 an ounce during Friday morning's London session – back up at levels last seen ten days ago – while stock markets and industrial commodity prices edged lower and government bonds gained.

A day earlier, gold prices jumped 1.6% during US trading – holding onto most of those gains during Friday's Asian session despite the release of lower-than-expected Chinese growth figures.


"We have now closed well above the short-term bear channel," reckon technical analysts at bullion bank Scotia Mocatta.

"The previous resistance level at $1656 should provide some support," they add, citing current resistance at $1680.

"[Gold] options activity this week suggests something is brewing," adds a note from investment bank UBS.

"There has been a good deal of interest in upside options, particularly for $1800 June calls, with gold's safe haven performance on Tuesday the likely catalyst."

Tuesday saw gold prices gain while stock markets fell.

Heading into the weekend, the cost to buy gold in Dollars was heading for a 2.2% weekly gain by Friday lunchtime in London.

Prices to buy gold in Euros were up 1.8% on the week at around €40,900 per kilo (€1270 per ounce), while Sterling gold prices were up nearly 2% at around £1050 per ounce).

Silver prices meantime held steady just below $32.50 per ounce during Friday morning's London trading – heading for a 1.6% weekly gain after posting gains in Thursday's US session.

CME Group, which operates the New York Comex futures and options exchange, has said it will cut its margins on silver futures for the second time since February.

China – the world's second largest source of private gold bullion demand last year – saw its economy grow at its slowest rate in nearly three years during the first quarter of 2012, according to official data published Friday.

Gross domestic product grew 8.1% in Q1 compared to the same period last year, lower than most forecasts. And down from 8.9% growth in the final quarter of 2011.

"What's clear is that the economy is still decelerating and the property sector clearly is deflating," says Yao Wei, Hong Kong-based China economist at Societe Generale.

"It seems that property investment has finally started to correct. I think this trend will continue and will drag growth even lower in coming months so we don't think this is the bottom yet. It means more monetary easing will be needed to prevent a sharper deceleration."

China's central bank has cut reserve requirement ratios – the amount banks need to hold in reserve as a proportion of their assets – twice in the last six months. New loans last month were over 1 trillion Yuan, their highest level for a year. 

Here in the UK, so-called 'factory gate' inflation – the price of outputs as measured by the producer price index – fell to 3.6% last month, down from 4.1% a month earlier.

Over in Europe meantime, German consumer price inflation was 2.1% in March – compared to February's 2.3%.

The European Central Bank is more likely to resume buying government bonds on the open market through its Securities Markets Programme than hold a third three year longer term refinancing operation (LTRO), according to a survey by newswire Bloomberg.

"Market stresses will eventually force the ECB to restart the bond program, but it's not imminent," reckons Ken Wattret, chief Euro are economist at BNP Paribas in London.

European banks borrowed over €1 trillion in total at the LTROs held in December and February.

Banks in Spain – which last month borrowed a record €316.3 billion from the ECB through its other liquidity channels, double February's figure – are thought to have used a lot of this funding to buy Spanish government bonds.

Benchmark yields on Spanish 10-Year bonds dropped from over 6.5% last November to less than 5% earlier this year following the announcement of the LTROs – though they have since risen again and are currently just below 6%.

"There is mounting evidence that the LTRO is pretty toxic for banks and isn't working,” says James Nixon, a former ECB official now chief European economist at Societe Generale in London.
"I don't think there will be another one."

"Something is wrong when you load up on assets that were considered risky in November and deemed un-risky in January," adds Royal Bank of Scotland chief European economist Jacques Cailloux.

"Now we're seeing the worst you could have hoped for. As soon as the situation of the sovereign worsens, banks will come under additional market pressure. That's extremely negative."

"Given the return of the debt worries," says a note from Swiss bullion refiners MKS, "gold will likely remain underpinned in the coming sessions. Nevertheless, one should keep in mind that the metal still remains capped by its overhead trend line resistance of $1680."

"But in order to capitalize on Europe's renewed woes," adds UBS, "gold needs to start behaving as a safe haven again. A one-day performance is not enough."

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 2012

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.


© 2005-2015 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

Biggest Debt Bomb in History