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
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
Silver's Massive Undervaluation Relative to Gold Makes It Irresistible - 14th May 20
Bitcoin Halving Passes with no Fanfare, but Smart Money is Accumulating - 14th May 20
Will Job Market from Hell Support Gold? - 14th May 20
The Tragedy Of Missed Covid-19 Opportunities - 14th May 20
Worst Jobs Report In US Economic History - And The Stock Market Continues To Rally - 14th May 20
NASDAQ Sets Up A Massive Head and Shoulders Pattern - 14th May 20
Perceiving Coronavirus as a Disruptive Technology - 13th May 20
Why Financial Trouble Brews on the "Home" Front - 13th May 20
Stock Market ‘Sentiment Event’ Rally Grinds On - 13th May 20
The Fed Now Owns All Markets - 13th May 20
Fruit Trees Gardening to Beat Coronavirus Blues - , Apple, Cherry, Kiwi, Pears, Plums, Grapes, Bananas May 2020 - 13th May 20
Gold Investors Shouldn’t Be Losing Focus - 12th May 20
S&P 500 Bulls Again At Resistance – Now What - 12th May 20
US Fourth Turning Accelerating Towards Debt Climax - 12th May 20
Gold in the year of the Coronavirus Pandemic - 12th May 20
Hi Ho Silver : Away! - 11th May 20
The Great Stock Market Disconnect - 11th May 20
The Big Move In Silver May Be Right Now - 11th May 20
Finding Winners in the Wreckage of the Coronavirus Economic Downturn - 11th May 20
Brave New Corona World – A heated Debate between Steven Pinker and Aldous Huxley - 11th May 20
Coronavirus Catastrophe Stock Market Implications - 10th May 20
US Stock Prices are Ignoring the Economic Meltdown, Wait for it… - 10th May 20
Forecasting Crude Oil: This Method Has Been the Undefeated Champion Since 1998 - 10th May 20
Coronapocalypse and Gold - How High Is Too High for the Yellow Metal? - 10th May 20
The Illusion of Owning Gold - 10th May 20 - Nick_Barisheff
The Financial Crisis Will Continue To Lurk Even If the Lockdown Gets Eased - 10th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Everyone Needs to Own Gold as Spain Denies Bailout

Commodities / Gold and Silver 2012 Oct 03, 2012 - 08:52 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleSPOT MARKET gold prices rallied to $1781 per ounce ahead of Wednesday's US session, recovering from slight losses earlier in the day to stay in line with recent trading, while stock markets were broadly flat and the Euro reversed earlier gains, as analysts speculated on when and whether Spain will request a bailout.


Silver prices rose briefly above $34.90 an ounce before easing back, while other commodity prices fell and UK and German bonds gained.

"We do not, at this stage, believe that another significant up move [for gold], that is to say to the $1900 level, will be seen before further consolidation has occurred," says Axel Rudolph, senior technical analyst at Commerzbank.

"The $1815 area may be reached, though."

Western households grew more bullish towards gold last month, according to Gold Investor Index data published by online gold and silver exchange BullionVault Wednesday. 

The Gold Investor Index, which tracks the balance between gold buyers and sellers on BullionVault's exchange, rose to 52.5 last month, up from 52.1 in August. A figure above 50 indicates more individual buyers than sellers during the month.

September saw the European Central Bank unveil its unlimited sovereign bond buying program, Outright Monetary Transactions, while the US Federal Reserve announced an open-ended third round of quantitative easing. The Eurozone crisis also returned to the headlines.

"Private households are continuing to join the bull market," says BullionVault head of research Adrian Ash.

"But the response by retail investors to both QE3 and the latest phase of the Eurozone crisis is more measured...than the recent price action alone might suggest."

Gold prices are up nearly $100 an ounce since the start of September, while the US Dollar Index, which measures the Dollar's strength against a basket of other currencies, has fallen more than 2% since August 31, the day Fed chairman Ben Bernanke hinted at QE3 during a speech at the annual Jackson Hole conference.

"Gold is just another currency," well-known investor and newsletter publisher Dennis Gartman told CNBC Tuesday.

"It is doing well in other currency terms...I am not a gold bug. I don't think the world is coming to an end, but I think everyone needs to own some gold."

Dollar gold prices hit new 2012 spot market high earlier this week, touching $1791 per ounce, but have been trading in a much narrower range over the last fortnight than they were over the four previous weeks.

"We are going through a bit of a consolidation period," says Jeremy Friesen, commodity strategist at Societe Generale.

"My suspicion is that we'll get more monetary policy responses from other central banks as the Fed program kicks off and the ECB program starts, probably by the end of this month. That's bullish for commodities like gold."

"There has been no further leg up in financial markets [this week]," adds a note from Barclays.

"[This] reflects ongoing uncertainty about the timing of Spain's formal request for an official [bailout] program and concerns about global growth."

News agency Reuters reported yesterday that Spain could be ready to request a bailout, which would pave the way for the European Bank to buy its bonds, as early as the weekend, but this was later denied by Spanish prime minister Mariano Rajoy.

"If a news agency reports that we'll ask for aid this weekend, there can only be two explanations," Rajoy told reporters Tuesday.

"That the agency is right, and knows more than I do, which is possible, or that they are not right...but, if it helps, and you accept that what I say is more important than this leak, I say no [we won't ask for a bailout this weekend]."

"The Spanish government seems to want to have its cake and eat it," says Standard Bank analyst Steve Barrow, noting that Spain would like the ECB to buy its bonds on the open market, helping to reduce borrowing costs, but does not want to accept the strict conditionality that could come with a rescue package.

Barrow adds that Spain may actually be able to reap the benefits of a bailout while avoiding some of the drawbacks.

"Spain can opt for what we'd call bailout-lite," he says, referring to a scenario whereby Spain enters into a more precautionary arrangement with lower conditionality but which would still be sufficient for the ECB to activate its Outright Monetary Transactions program.

"[However] the country's poor economic and budgetary situation suggests to us that it will, indeed, be sucked towards a full bailout in the future."

Elsewhere in Europe, Germany's services sector fell into contraction last month, September PMI data show, while the sector for Eurozone as whole continued to contract. Britain's services sector continued to expand, according to PMI data, but at a slower rate, with the PMI dropping from 53.7 in August to 52.2.

"Rather than clearing, the cloud of uncertainty hanging over business investment and spending got notably darker in September," says Chris Williamson, chief economist at Markit, which produces the PMIs.

Retail sales in the Eurozone meantime rose slightly in August, data released this morning show, rising 0.1%.

China, the world's second-biggest gold buying nation last year, saw slowing activity in its services sectors during August, according to purchasing managers index data published Wednesday. China's non-manufacturing PMI, published by China Federation of Logistics and Purchasing, fell to 53.7, down from 56.3 in July. A figure above 50 indicates sector expansion.

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.


Post Comment

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

6 Critical Money Making Rules