Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
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
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Gold Trades "In Sideways Range" Ahead of European Summit

Commodities / Gold and Silver 2012 Jun 25, 2012 - 12:01 PM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleWHOLESALE MARKET gold bullion prices dropped below $1570 an ounce during Monday morning's London session, though they remain broadly in line with where they ended last week, with markets focused on this week's European leaders' summit.

Gold bullion is now at levels similar to those seen in the second week in May, when gold fell through $1600 for the first time in 2012.

"Gold has essentially been in a sideways range for the past seven weeks," says the latest technical analysis note from bullion bank Scotia Mocatta.

"We will need to see a break through the low at $1526 to get a bigger directional move."

Silver bullion hovered around $26.80 an ounce – a slight dip on last week's close – while other commodities were also broadly flat, with the exception of oil which ticked lower.

US Treasury bond prices gained meantime, along with other major governments bonds, while the Dollar also strengthened.

By contrast, European stock markets sold off this morning – with Germany's DAX down 1.8% by lunchtime –as many analysts focused on the European Union summit that takes place this Thursday and Friday in Brussels.

"The stakes are quite high [at this summit]," says Standard Chartered economist Thomas Costerg in London.

"There are very high risks building in the system, borrowing costs are rising, there are stresses in asset classes and growth is falling very rapidly."

The leaders of Germany, France, Italy and Spain, who met in Rome last Friday, announced they will put forward a growth package worth up to €130 billion at this week's summit, although no other details were provided. There was also agreement on the creation of a banking union, for which draft proposals are being drawn up ahead of this week's summit, according to newswire Reuters.

Ahead of the meeting, Italian prime minister Mario Monti proposed that money from Eurozone rescue funds be used to buy the government bonds of distressed Eurozone sovereigns directly on the open market. There was however no sign at Friday's press conference that German chancellor Angela Merkel favors such a plan.

"Monti's proposal amounts to state financing via the central bank printing press," said Bundesbank president Jens Weidmann over the weekend.

"[This] is forbidden by EU treaties...monetary policy should be restrained from limiting the financing costs of member states and from going a long way to shutting down market mechanisms," added Weidmann, who sits on the European Central Bank's Governing Council.

In May 2010, the ECB itself announced it would intervene in debt markets, and extended its Securities Markets Programme last year by buying Spanish and Italian government bonds.

"The main problem with bond buying," says Citigroup strategist Jamie Searle, "is that it gives investors an opportunity to reduce holdings, but it doesn't convince others to add."

The German government meantime has agreed to underwrite the debt of German states, which from next year will be able to issue debt for which they and the federal government are jointly liable. The decision is part of a deal with opposition parties in return for support in ratifying the fiscal treaty, on which the Bundestag is still to vote, according to newswire Bloomberg.

European leaders should create a European Fiscal Authority to buy the debt of Eurozone governments in return for fiscal reforms – financing the purchases by issuing debt for which Euro area governments are jointly and severally liable – billionaire investor George Soros argues in today's Financial Times.

 "We have to fight the causes [of the crisis]," countered German finance minister Wolfgang Schaeuble in a television interview Sunday.

"Money alone or bailouts or any other solutions, or monetary policy at the ECB...that will never resolve the problem."

Schaeuble added that US president Barack Obama "should focus on reducing the American deficit" rather than exhorting European leaders to do more.

"People are always ready to give others advice quickly. Our argument is 'we're ready'. We want more Europe."

On the currency markets, the Euro fell below $1.25 for the first time in two weeks this morning.
"The weaker Euro is keeping a lid on precious metals," says Monday's note from commodity strategists at Standard Bank.

"Physical demand out of India is being hampered by a weak Rupee, although Far East buying is still relatively robust."

Spain meantime has formally requested a bailout to fund restructuring of its banking sector, two weeks after Eurozone leaders announced they would agree a credit line for up to €100 billion.

Over in New York, the difference between bullish and bearish contracts held by noncommercial gold futures and Options traders on the Comex – the so-called speculative net long – rose 3.8% to the equivalent of 429 tonnes of gold bullion in the week ended last Tuesday.

In the same period, the volume of gold held by the world's largest gold ETF, the SPDR Gold Trust (GLD), rose 0.6% to 1281.6 tonnes, though GLD volumes have been flat since last Tuesday.

By Ben Traynor

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.

© 2005-2019 - 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