Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Weakens as Stock Markets Slump At Start of Week

Commodities / Gold & Silver Jan 28, 2008 - 09:18 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES moved sharply in a $10 range early Monday, hitting $921.50 overnight in Asia – more than 1% above Friday's close – before slipping back to record an AM Fix in London of $916.50 per ounce.

Gold mining production in South Africa, the world's No.2 bullion producer, remained closed by power shortages meantime, and global stock markets continued to plunge, losing more than 3.4% in Asia and starting the week in Europe more than 1.8% down.

India investors are now the butt of jokes about bankruptcy, reports DNAIndia. The Sensex has lost almost 11% of its value since New Year's Eve.

"Gold is boosted by the expectation that the Fed will have to pick and choose between fighting inflation or fighting recession," said Wallace Ng, head of precious metals trading at Fortis Bank in Hong Kong , earlier today.

"Now it seems they have given up on inflation."

The Federal Reserve last week announced the sharpest cut to US interest rates since 1982, and it is certain to cut the price of Dollars further when it meets this Wednesday according to betting at the Chicago Board of Trade (CBOT).

Twenty-two out of 29 gold traders and analysts surveyed by Bloomberg News advise Buying Gold – already 9.5% higher against both the Dollar and Euro so far this month.

But in the physical Gold Bullion market, demand has virtually vanished according to reports from Asia .

"Most jewelers don't think the Gold Price is real," one bullion dealer in Singapore told Reuters today. "They are facing a dilemma.

"They can hedge [by selling gold futures], but they have to pay margin calls if the price goes up. If the price goes down, they also suffer. They are not happy. This is what I gather from the wholesaler side.

"Gold jewelers are even wondering whether they should liquidate their assets and keep cash instead."

Noting a sharp decline in last month's gold refinery turnover worldwide, the latest Refining Monitor from Mitsui says that physical buyers only began to step back in last week when the price fell nearly $50 from its previous high of $914 per ounce.

Now with a new all-time record set above $923 per ounce, "the short term outlook for the yellow metal looks uncertain," the Monitor notes. "While physical buying would increase at $850 levels, the volatility in the Gold Market cannot be ignored and this should act as the determining factor for the overall depth of physical interest."

Back in the equity markets, Australian investors were spared further losses by a public holiday on Monday, but today's sell-off in Asian-Pacific stocks took the region's total losses for 2008 to date above 12%.

The Gold Price in Aussie Dollars meantime rose to a fresh record high of A$1,050 per ounce, even as the AUD recovered from last week's seven-month lows vs. the Japanese Yen.

For British investors wanting to Buy Gold today, the price touched Friday's new all-time high above £465.50 per ounce as the Pound crept above $1.9800. European investors saw the Gold Price in Euros touch €627.30 as Societe Generale, the second-largest bank in France , dropped 7.4% of its value on fresh revelations about the "rogue trader" losses of $7.1 billion announced last week.

The Euro put on half-a-cent to $1.4720.

US crude oil prices fell to $90 per barrel despite analysts agreeing that the Opec oil cartel will not raise its output quotas at Friday's extra-ordinary meeting in Vienna .

Corn, soybeans and wheat prices all slipped back after a three-session surge, and copper prices also fell in Shanghai – the first drop in four sessions – despite news that domestic Chinese stockpiles of the metal have shrunk to a 32-month low.

The longer-term trend for raw materials prices still points higher, however, even as global interest rates are led lower by the US Federal Reserve. Since this time last year, the UBS Bloomberg Index of 26 major commodities has now risen by 31%.

Today platinum futures traded in Tokyo rose to a new record high as South African production remained closed by electrical shortages. The head of Anglo American, Cynthia Carroll, today flew to Johannesburg to discuss getting its production of 2.6 million ounces-per-year restarted.

Eskom, the state-owned power utility, offered to guarantee supplies to gold mining firms this weekend if they agree to reduce their consumption by 10% or more.

"I think the shortage has been happening all the time and Eskom was probably not as honest as it should have been about the situation," said Graham Briggs, CEO of South Africa's Harmony Mining on Friday.

"We've got all the costs right now, and we're not producing any gold, so we lose a serious amount of money, in the order of probably 60 million Rand a day [$8.6m].

"It is extremely serious."

An Eskom spokesman said on Sunday that it may be six weeks before South African gold-mining production comes back online.

"We are talking 200 million Rand in revenue [per day] and about R60m in profit," reckons Nick Goodwin, a local analyst.

"What's the use of having such high Gold Prices if you have no product to sell?"

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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.

Adrian Ash Archive

© 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