Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Price Negative Forecast Remains

Commodities / Gold and Silver 2012 Jun 26, 2012 - 07:13 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleSPOT MARKET prices to buy gold traded just above $1580 an ounce throughout Tuesday morning's London session, up around 0.6% on last week's close following gains the previous day.

Prices to buy silver traded in a tight range around $27.50 an ounce – 2.1% up on the week so far.
"After last week's bearish price action it is hard to get excited about a sustained rally [for gold]," says the latest note from technical analysts at bullion bank Scotia Mocatta.

"In our opinion," adds Commerzbank senior technical analyst Axel Rudolph, "gold has resumed its downtrend...we will retain this negative forecast while the gold price trades below the current June high at $1641."

European stock markets meantime edged slightly higher by lunchtime in London – following losses the previous day – while commodities were broadly flat and US Treasury bonds fell, as markets continued to focus on upcoming policy discussions in Europe.

On the currency markets, the Euro struggled to stay above $1.25 this morning, having fallen from one-month highs last week.

"If the US Dollar remains strong, then gold may easily move down a little bit," says one bullion dealer in Hong Kong.

"Sentiment in general is a bit mixed. If you have less money in your pocket, why should you buy gold? The only thing that people are buying for the time being is the US Dollar."

The European Council – which according to its website "defines the general political direction and priorities of the European Union" – has called for "greater pooling of decision making on budgets" across the Eurozone, ahead of the EU summit which starts this Thursday and concludes Friday.

"A fully-fledged fiscal union," it says in a report issued Monday, "would [ultimately] imply...the development at the Euro area level of a fiscal body, such as a treasury office."

The report, which is expected to form the basis for discussions at this week's summit, outlines "four essential building blocks" for greater European integration. As well as integrated budget setting, it calls for an "integrated financial framework" – including cross-border deposit insurance and bank resolution schemes – an "integrated economic policy framework" and stronger "democratic legitimacy and accountability".

The report also suggests the issuance of common debt instruments such as so-called Eurobonds "could be a medium term perspective".

"Steps towards the introduction of joint and several sovereign liabilities could be considered," the report says, "as long as a robust framework for budgetary discipline and competitiveness is in place."

German chancellor Angela Merkel yesterday described Eurobonds as "economically wrong and counterproductive".

"There is now a growing suspicion that Germany is simply not ready to accept the level of debt mutualization necessary to restore confidence and keep the single currency project alive," says Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy specializing in sovereign credit risk.

Cyprus became the fifth Eurozone nation to apply for a bailout Monday, following a decision by ratings agency Fitch to cut the country's credit rating to junk status. The Cypriot government aims to contain "spillover effects" from the Greek economy, to which Cypriot banks have "large exposure", an official statement said.

Over in Athens, Greece's new finance minister Vassilios Rapanos has resigned four days into his appointment, after he collapsed and was hospitalized Friday.

Ratings agency Moody's meantime has downgraded 28 Spanish banks, including Santander, following its decision earlier this month to cut Spain's sovereign rating to one notch above junk.

Over in India meantime, the Rupee continued to trade near all-time lows against the Dollar on Tuesday, despite moves a day earlier by the Reserve Bank of India aimed at boosting capital inflows, such as raising the limit for the amount of government bonds foreign investors can hold.

"These are just stop-gap arrangement," says Sonal Varma, economist at Nomura in Mumbai.

"What has the government done to reduce the fiscal deficit and curb the current-account deficit?"

"The major issues in India," adds Benoit Anne, managing director at Societe Generale in London, are the question marks about growth in the context of China being heavily scrutinized on the same topic, as well as the credibility of economic and financial policies."

Raising the amount of Indian government bonds foreigners can hold "is not a guarantee that foreign investors will rush in," Anne adds, "especially if the fundamental problems have not been addressed."

Rupee prices to buy gold have hit a series of record highs this month, as the Indian currency has fallen against the Dollar.

"For the past two to three months, there has been virtually no gold buying in India," says Krishna Kumar Nathani, managing director of Chennai-based consultancy

"But if international prices were to retreat and the Dollar-Rupee holds at current levels, then I expect demand to pick up again."

"If we have good monsoon rains," adds Bombay Bullion Association President Prithviraj Kothari, "then gold demand could be anywhere between 750 and 800 metric tonnes this year."

India was the world's biggest gold buyer in 2011, with total Gold Bullion demand totaling 933.4 tonnes according to World Gold Council data. Gold demand in the first quarter of 2012 however was 207.6 tonnes, down 29% on the same period last year, with China overtaking India as the world number one for the second quarter running.

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