Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Could Benefit from Policymakers Actions

Commodities / Gold and Silver 2012 Jul 02, 2012 - 06:05 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices hit $1597 an ounce during Monday morning trading in London – in line with where they ended last week – while European stock markets ticked higher following the release of better-than-expected European manufacturing data.

"Gold still remains in the same range since early May," say technical analysts at bullion bank Scotia Mocatta, adding that gold "would have to move above trendline resistance [at $1624] to reverse the bearish posture."


Silver bullion this morning climbed as high as $27.58 an ounce – also in line with last week's close – as other industrial commodities fell, with WTI crude oil down below $84 a barrel.

US Treasury bonds edged higher, while UK and German government bond prices fell.

Eurozone manufacturing activity continued to contract last month, with the Eurozone PMI staying unchanged at 45.1 – slightly above consensus forecasts.

Germany's manufacturing PMI dropped from 45.2 to 45.0 – though this too beat expectations.

Eurozone joblessness meantime ticked higher in May, with the unemployment rate rising to 11.1%, up from 11.0% in April, figures published Monday show.

The European Central Bank is expected to cut its main policy rate below 1% when it meets on Thursday, according to a poll of economists by newswire Reuters.

ECB president Mario Draghi said Friday he is "actually quite pleased" with the outcome of last week's European Union summit, at which it was agreed rescue funds could be used to directly recapitalize banks - but only after the creation of a single banking supervisory body.

"The ball is [now] very much in the ECB's camp," says Gilles Moec, London-based European economist at Deutsche Bank.

"We are staunch believers that gold will remain a risk-on asset for the foreseeable future," says Nikos Kavalis, metals analyst at RBS.

"If we continue to see a more definitive policy response by authorities, gold will continue to benefit...[but] the investment bid will be essential for the price to move up."

In Vienna, Austria is today expected to become the latest Eurozone country to ratify the creation of the European Stability Mechanism, the permanent bailout fund that was supposed to become operational yesterday and is now scheduled to launch next Monday, when lawmakers vote on the issue today.

The German Bundestag voted in favor of ratification on Friday, although the ESM still needs to be approved by the German Constitutional Court.

Here in the UK, June's manufacturing PMI came in better-than-expected Monday at 48.6, up from 45.9 in May, though the figure suggests continued contraction in the sector.

Britain is "in the middle of a deep crisis," Bank of England governor Mervyn King said last week.
"I don't think we are yet half-way through."

The Bank's Monetary Policy Committee announces its latest monetary policy decisions this Thursday, including whether it will launch another round of quantitative easing to add to the £325 billion in asset purchases already undertaken.

"Our working assumption is that the committee will raise the QE limit by £50 billion," says Peter Dixon, global equities economist at Commerzbank.

"But given the fragility of the economy and financial markets we cannot rule out an even bigger increase."

Elsewhere in London, some traders at Barclays may have believed the practice of underreporting borrowing costs had tacit approval from the Bank of England, according to newspaper reports.

Barclays was fined £290 million last week after it admitted some of its staff gave inaccurate information about the borrowing costs to the committee that sets Libor – the London interbank offered rate widely used as a benchmark.

Former Barclays chairman Marcus Agius, who resigned Monday, and chief executive Bob Diamond are due to appear before the Treasury Select Committee this week.

Reports suggest that a conversation between Diamond and the Bank's deputy governor, financial stability Paul Tucker may have led to the impression among some staff that the Bank, concerned that Barclays' Libor submissions were higher than its peers, was content for Barclays to underreport. The Bank of England denies it was aware of attempts to manipulate Libor.

China's manufacturing sector grew at its slowest pace for seven months in June, according to official purchasing managers index data published Sunday. China's National Bureau of Statistics reported last month's PMI as 50.2 – down from 50.4 a month earlier. A figure above 50 indicates the sector expanded, while below 50 suggests contraction.

"New export orders placed at goods producers dropped at the steepest rate in over three year," says HSBC in the report accompanying its own PMI figure. HSBC's privately-produced PMI was 48.2 for June, up from 48.1 the previous month.

"It is all about growth and employment," says HSBC economist Qu Hongbin.

"Growth is likely to be on track for further slowdown...we expect more decisive easing efforts to come through in coming months."

"We expect the government to loosen policy further to ensure economic growth rebounds in the third quarter," agrees Nomura economist Zhang Zhiwei, who predicts the People's Bank of China will cut banks' reserve requirement ratio – the amount they have to hold in reserve as a proportion of assets – by 0.5 percentage points this month.

China was the world's biggest source of gold bullion demand in the six months to the end of March, overtaking previous world number one India.

Over in New York, the so-called speculative net long position of gold futures and options traders on the Comex – calculated as the difference between bullish and bearish contracts held by noncommercial traders – fell 16% in the week to last Tuesday to the equivalent of 360 tonnes of gold bullion, figures from the Commodity Futures Trading Commission show.

"We regard the current skepticism displayed by speculators to be constructive [for gold]," says a note from Commerzbank this morning, adding that most traders' fears should now be "priced in".

By Ben Traynor
BullionVault.com

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 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Craig
02 Jul 12, 16:17
re..

It seems like its a great time to buy gold and silver bullion!


DB
03 Jul 12, 00:32
contrarian or ponzi?

Yes it does craig. A better time to buy when it was $250, but its always a great time to buy because it can only ever go up in price (so long as more suckers keep lining up to buy, check the queue behind you). Look, according to Commerzbank if people have their doubts about this scheme, that only makes it more bullish:

""We regard the current skepticism displayed by speculators to be constructive [for gold]," says a note from Commerzbank this morning"

Is that contrarian, or the logic that leads to a ponzi bubble? I'm not sure but so long as I'm thinking about it, by this logic you'll be OK.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in