Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold "Testing $1550" as Stocks Plunge, German Bund Yields Vanish, Investors Flee Risk for Cash

Commodities / Gold and Silver 2012 May 23, 2012 - 09:40 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleThe WHOLESALE gold price bounced from a 4-session low at $1552 per ounce Wednesday morning in London, rallying with the Euro currency as world stock markets slumped.

The Athens stock market hit a fresh 22-year low, and Wall Street futures pointed 0.7% down, while US Treasuries rose sharply together with Japanese, German and UK bonds.


The Brazilian Real continued to weaken, hitting new 3-year lows on the forex market despite the Banco Central do Brasil selling some $2.8 billion in US Dollars via currency swaps over the last 3 trading days in a bid to stem the slide.

As recently as March, Brazil's government accused the United States of under-pricing the Dollar, cutting its own interest rates to try and devalue the Real in what ministers repeatedly called a "currency war" threatening the country's exports and attracting inflows of "hot money" to its strong natural resources sector.

Commodity prices today fell to a 5-month low on Standard & Poor's GSCI index.

Silver prices held over $1 below last week's finish, trading at $27.75 per ounce as the start of New York dealing approached.

"There was no real dip buying" overnight as the gold price bottomed, says one wholesale dealer in a note, although Hong Kong premiums over benchmark London prices held firm between $1.00-1.50 per ounce Wednesday.

"Gold is acting more as a risky asset," Robin Bhar of Société Générale is quoted by Thomson Reuters, "and everything is tumbling this morning ahead of the informal [Eurozone] finance ministers meeting [tonight], where nothing good is really expected."

"Gold has pulled back to test support at $1550-1500," says a note from Bank of America-Merrill Lynch technical analysts Mary Ann Bartels and Stephen Suttmeier, quoted by BusinessWeek.

"This support is holding, which sets up gold for a rally.

"Our longer-term view remains that gold is in a secular bull market with upside potential to $2000-2300 to as high as $3000 in coming years."

In Athens on Wednesday, former prime minister Lukas Papademos sought to "clarify" comments quoted by Dow Jones Newswires yesterday in which he said "It cannot be excluded preparations are being made to contain the potential consequences of a Greek Euro exit."

Prime minister Fredrik Reinfeldt of Sweden – like the UK, a European Union member still outside the Eurozone currency bloc – today repeated last week's comments from finance minister Anders Borg that the Greek situation was "very close to the end of the road."

Germany meantime sold Germany sold €4.5bn of two-year government bonds Wednesday morning at an all-time record-low of 0.07% in annual yield, dispensing with a formal interest coupon altogether.

"There is no way of introducing [pan-Eurozone government bonds] under the current treaties," said an un-named official in Berlin today, rejecting an idea widely mooted as a way of using Germany's strong credit rating to finance weaker states' deficits.

"Indeed, there is an explicit ban on them. That's a firm conviction which will not change in June."

Citigroup analysts said in a new report that the odds of a Eurozone break-up are now at 19% according to financial markets.

"In the event that the implied probability of a break-up increases further," Citi believes, "then [2-year German bond] yields could fall to minus 0.75%" as more capital pours into 'safe haven' debt, driving the price higher.

Thomson Reuters' latest poll of portfolio managers says they're now holding more cash than any time since the 8-year high hit in January.

"Our Sentiment Indicator dropped to almost zero one week ago, and has failed to pick up," says Société Générale's cross-asset quant analysis research.

"The extent and consistency of this move suggest taking this signal seriously, and staying away from long risk positions for the moment."

Tuesday saw the $68 billion SPDR Gold Trust ETF shed 17.5 tonnes from the gold backing its shares, the sharpest 1-day redemption since August.

"Event risk is stacked towards the tail end of the week," says a note from Japanese conglomerate Mitsui.

"After new home sales [today], on Thursday we have a slew of European PMI's, US goods orders and jobless claims plus Comex option expiry, where a considerable chunk of open interest is situated at $1600."

Data from Thomson Reuters showed a marked rise in put options, with speculators looking to sell gold futures at $1550 and $1575 per ounce in particular.

Meantime in India, where the government in New Delhi has acted to curb gold imports in 2012, "Scrap gold sales have picked up by 30% in the span of just one week as gold prices in local terms surged," says bullion market-maker HSBC.

If consumer selling continues, "India may require lower gold imports," says the bank. But "weak bullion import demand may present headwinds to any near-term gold rally."

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(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.


© 2005-2019 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