Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
Where Will Crude Oil Price Head Next? - 25th Oct 16
Diamonds in the Gold and Silver Mining Stocks - 25th Oct 16
Trump’s Gettysburg Address against the New World - 25th Oct 16
This Past Week in Gold - 24th Oct 16
Can Gold Continue To Rise, Since The Usd Is Moving Higher Too? - 24th Oct 16
Why are Americans Avoiding the Stock Markets; Fear or Lack of Money? - 24th Oct 16
The US Is NOT a Low-Tax Jurisdiction - 24th Oct 16
Stocks, Crude Oil and EURUSD Trend Forecasts - 24th Oct 16
Stock Market Another Month to Go? - 24th Oct 16
Large Sell-off in Stock Market Looming - 24th Oct 16
Ungovernability - 24th Oct 16
Stock Market Boredom Before The Storm - 24th Oct 16
Establishment Mainstream Media Elite Buys US Election for Hillary Clinton, Time Running Out for Trump - 23rd Oct 16
Inflation About To Explode Higher - 22nd Oct 16
Still waiting for SPX uptrend to kick off - 22nd Oct 16
Will a Rising US Dollar Crush Gold’s Fledgling Bull? - 22nd Oct 16
Why The Global Economy Will Disintegrate Rapidly Back to Olduvai Gorge - 22nd Oct 16
GLD Bleeds Out; Weekly Gold Update - 22nd Oct 16
Stock Market Investment Success Through the “Investment Rule of 72” - 21st Oct 16
The Final Bottom in Gold - WHEN - 21st Oct 16
Gold Green Lights Upleg - 21st Oct 16
Demand for US Mints Silver Eagles has ‘Returned with a Vengeance’ - 21st Oct 16
Central Bankers Can't Stop The Death Blow Of The Post US Election Recession - 21st Oct 16
The Fortune at the Bottom of the Pyramid: Golden Opportunity for Frontier Asia - 21st Oct 16
Have You Taken These 4 Simple Steps to Improve Your Trading? - 21st Oct 16
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's insane Housing Market Will Tumble and Crash in 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

Central Bank Action "Good for Gold", ECB Bazooka Needed as Pressure on Spain Intensifies

Commodities / Gold and Silver 2012 Sep 03, 2012 - 06:50 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleSPOT MARKET gold prices hovered close to $1690 an ounce during Monday morning's London trading, close to five month highs hit after Friday's speech by US Federal Reserve chairman Ben Bernanke, in which he noted the US economic situation is "far from satisfactory".

"Central banks are still hurtling towards more cash-printing," one Hong Kong dealer told newswire Reuters Monday.

"They are under pressure to be doing something actively, which is good for gold."

"Gold has broken through the topside of a large triangle pattern which had resistance at $1655," adds the latest technical analysis from bullion bank Scotia Mocatta.

"The next resistance is the $1790 high from March."

On the gold futures and options market, the so-called speculative net long – defined as the difference between bullish and bearish contracts held by non-bullion industry traders – rose to its highest level since early March last Tuesday, according to weekly figures published each Friday by the Commodity Futures Trading Commission.

Monday morning's AM gold fix in London – which acts as a reference and clearing price for the professional bullion market – put the Euro price of gold at €1341.72 per ounce, the highest Euro fix price since 12 September 2011.

Euro gold prices breached €1340 per ounce on four trading days in September last year, which also saw record-high prices for US Dollar and UK Sterling investors.

Silver meantime hit $31.94 per ounce this morning – its highest level since April – while stock markets edged higher, with the exception of Spain's Ibex.

European Central Bank chief Mario Draghi is due to appear before the European Parliament's Committee on Economic and Monetary Affairs Monday to discuss the creation of a so-called banking union among Eurozone members.

The European Commission last week said it will recommend giving the ECB supervisory powers over all Eurozone banks, of which there are approximately 6000. German finance minister Wolfgang Schaeuble has argued that only the largest banks should be subject to a supranational regulator.

"If the German position prevails," writes Wolfgang Munchau in the Financial Times, "the project of a banking union will have irrevocably failed...the Eurozone will remain a monetary union with nationally supervised and crisis-prone banks for the foreseeable future."

The ECB should give a "credible signal" to markets that it will do what is necessary to contain sovereign borrowing costs when it makes its latest policy announcement this Thursday, the head of the Organisation for Economic Cooperation and Development Angel Gurria said Sunday.

"The ECB is the bazooka, the firepower, the muscle, the one that has the capacity to impress upon the markets and say: yes we will," said Gurria.

The ECB has faced opposition to the idea of bond market intervention from some German policymakers, while it was reported last week that Bundesbank chief Jens Weidmann has considered resigning.

Draghi responded last week by insisting that "exceptional measures" may be required to fulfill the ECB's mandate.

"Draghi's announcement of intervention shows the robust will of the ECB to solve the problem," said Spanish prime minister Mariano Rajoy in a press interview published over the weekend.

Benchmark yields on Spanish 10-Year bonds fell as low as 6.2% last month, having hit a Euro-era high of 7.7% in July, although they have crept higher since, hitting 6.9% this morning.

"The market is expecting a lot from the ECB," says Bank of America Merrill Lynch economist Gustavo Reis.

"However, we [expect] little clarification on the bond-buying program. The likely market disappointment should intensify the pressure on Spain."

Spain's manufacturing sector, continued to contract last month, though at a slower rate than in July, according to purchasing managers index data published Monday.

PMI data for German manufacturing also suggest the sector shrank at a slower rate last month. The opposite was true for the Eurozone as a whole however, with manufacturing activity falling at a faster rate in August than a month earlier, according to PMI data.

Over in China, one of the world's top two gold buying nations, official August PMI data published Saturday indicate reduced manufacturing activity for the first time since last November. HSBC's alternative PMI measure, which focuses on smaller firms, also suggested manufacturing contracted last month.

Sales of gold coins by the US Mint meantime recorded their worst August since 2007, US Mint data show.

In South Africa, around 12,000 miners have been on strike since Wednesday at the KDC Gold Mine, operated by South African-listed Gold Fields.

"It appears that the strike is the result of an internal dispute between the local branch leadership of the National Union of Mineworkers and certain employee groupings within the NUM membership, who are demanding the resignation and replacement of local NUM branch office bearers," says a statement from Gold Fields.

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.

© 2005-2016 - 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

Catching a Falling Financial Knife