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
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Hits Post-Fed Low, But Supported by Central Bank Buying Supports

Commodities / Gold and Silver 2012 Jun 21, 2012 - 08:09 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleThe WHOLESALE MARKET gold price fell further Thursday in London, falling hard to 8-session lows at $1587 per ounce following last night's "no change" decision from the Federal Reserve on new US quantitative easing.

Major-government bond prices pushed higher, but the Euro currency retreated, down nearly 1¢ from its post-Fed high to trade back down at $1.2650.


Silver prices hit a new low for the month of June at $27.70 per ounce, while commodity indices dropped to 19-month lows and US crude fell to 7-month lows beneath $80 per barrel.

European stock markets also fell, with London's losses led by mining equities.

"Achieving a durable and prompt exit from the Euro area crisis, as well as avoiding the US 'fiscal cliff' [due start-2013] is crucial for sustained global recovery," said a new report from the International Monetary Fund on the outlook for the G20 group of large economies.

First estimates for China's manufacturing activity in June showed an eighth month of contraction on HSBC's purchasing manager' index – the longest such stretch since 2008.

Germany's PMI joined the rest of the Eurozone in showing a sharp contraction in both manufacturing and the services sector.

With the gold price slipping 2.5% for the week so far, "Hats off to the players in the gold market," says Edward Meir for INTL FC Stone, "who had the sense not to join in on the rallies [in commodities and equities] that were taking place" before the US central bank's Wednesday announcement.

"The high expectations in advance of the US Fed's meeting were priced out" of other asset classes, agrees Eugen Weinberg at Commerzbank in Frankfurt.

"[But] even without unconventional monetary policy," he adds in today's commodity note from the German bank, "central banks are currently shoring up the gold price...by diversifying their currency reserves and continuing to buy gold."

Russia's central bank bought another 14 tonnes of gold bullion in May, according to data from the Interfax agency Thursday.

That takes net purchases by the official sector to almost 150 tonnes for 2012 so far, based on data compiled by the World Gold Council market-development group.

"It is clear that BRICS countries have entered the stage when they can demand to be reckoned with," said Russia's deputy finance minister Sergei Storchak to reporters this morning, suggesting that Brazil, Russia, China, India and South Africa may launch a joint "anti-crisis" fund to challenge the IMF in Washington.

"It will be a parallel mechanism in addition to the IMF," said Storchak.

Between them, the so-called BRICS countries now hold over $4 trillion in central-bank reserves, including 2,650 tonnes of gold bullion – more than 8% of national gold reserves worldwide, and greater than all single hoards but the US and Germany's.

"Despite trading well through support in the low $1600s, gold managed to close with only a small loss on the day," says last night's report from bullion bank Scotia Mocatta.

"The bearish trendline off the March highs should provide resistance at $1632."

"Gold's dip below the $1600 level has confirmed our suspicion that the market was expecting something more [from the US Fed]," says today's analysis from Standard Bank in London, citing support for the gold price at $1585.

Any move in the gold price on news of a Spanish bank rescue "could be a knee-jerk move" Standard Bank adds, "given that markets have already discounted that Spain needs a bank bailout."

Madrid today enjoyed strong demand for €2.2 billion of medium-term debt sold at auction, but still had to pay investors record-high interest rates of 6.07% per year on 2017 bonds – up from 4.96% at last month's sale.

Set to announce his coalition cabinet in Athens on Thursday, new Greek prime minister Antonis Samaras will also ask Brussels to give Greece a further two years to meet its agreed government spending and debt targets, according to press reports.

Next week European Union president Herman Van Rompuy will present a "blueprint" for the Euro currency union to national leaders, according to un-named officials cited by Bloomberg.

The plan includes "jointly issued short-term bills, a debt- redemption fund and common banking supervision," says the newswire.

"There are no concrete plans that I know," German chancellor Angela Merkel said at a press conference in Berlin last night, "but there is the possibility of [the EU bail-out funds] buying government bonds on the secondary market.

"But that is a purely theoretical comment," she added – contracting Italian caretaker prime minister Mario Monti's earlier call for discussion on the issue.

"This is not a subject for debate right now."

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.


© 2005-2022 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