Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17
Why the SNP WILL Destroy Scotland, Exit UK Single Market for EU - IndyRef2 - 19th Mar 17
Crypto Craziness: Bitcoin Plunges on Fork Concerns, Steem Skyrockets and Dash Surges Above $100 - 19th Mar 17
What ‘Ice-Nine’ Means for Your Money - 19th Mar 17
Stock Market 4 Year Cycle - 18th Mar 17
The Only Article You Need to Read to Understand the Trump Phenomenon - 17th Mar 17
Janet Yellen Just Popped the Stock Market Bubble - 17th Mar 17
Financial Crisis, Steve Eisman: Smart, Lucky, Abrasive & Now One Of Them - 17th Mar 17
Gold Cup – Horse Racing’s Greatest Show, Gambling and ‘Going for Gold’ - 17th Mar 17
Trader Education Week - Free Event to Help You Learn to Spot Trading Opportunities - 17th Mar 17
$1.4 Trillion of SPX Notionals Due to Expire - 17th Mar 17
Preserving Order Amid Change in NAFTA, U.S. Sovereignty v. WTO - 17th Mar 17
3 Maps That Explain Why Syria Raqqa Battle Will Drag On - 17th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

Market's Fed Reaction "Could Be Worrying Sign for Gold"

Commodities / Gold and Silver 2012 Dec 14, 2012 - 08:32 AM GMT

By: Ben_Traynor

Commodities

SPOT MARKET gold prices looked to be headed for a third weekly loss in a row Friday lunchtime in London, after failing to break above $1700 an ounce, while stocks and US Treasuries were little changed on the day, with no signs of progress from Washington on the so-called fiscal cliff.

Silver was also headed for a third losing week in a row, trading around $32.60 an ounce for most of this morning, as other commodity prices gained slightly.


"A lack of activity has kept precious metals largely unchanged this morning," says today's commodities note from Standard Bank.

A day earlier, gold dropped back below $1700 an ounce Thursday, despite the US Federal Reserve committing to $45 billion a month in Treasury purchases the day before.

"The bulls were making the argument that the central bank would remain easy, at least until 2015, helping provide an element of support for gold," says a note from Ed Meir, analyst at brokerage INTL FCStone.

"The bears countered that there would not be any additional easing in the pipeline between now and 2015, and also pointed out that the Fed did, after all, outline specific targets at which point it would start shrinking its bloated balance sheet...Thursday's action seems to have supported the bearish stance."

"It is perhaps a worrying sign that the latest installment of QE has had no positive impact on gold prices at all," says a note from investment bank Natixis.

"No matter which side of the Fed argument one is on," says INTL FCStone's Meir, "we suspect that much of Thursday’s selling was also triggered by the fact that investors are becoming increasingly nervous about the lack of progress emanating from the fiscal cliff talks."

President Obama and Republican House of Representatives speaker John Boehner had what statements from both parties called a "frank" meeting about the so-called fiscal cliff Thursday, adding that "lines of communication remain open" between the two.

No agreement has been reached on deficit reduction measures. Unless Congress passes new legislation, tax cut expiries and spending cuts worth an estimated $600 billion are due to kick in starting at the end of this month.

Barclays Capital meantime has cut its gold price forecast for 2013. BarCap forecasts gold will average $1815 an ounce next year, 2.4% down on the previous projection, while the investment bank's forecast for silver is unchanged at $32.50 an ounce.

"We retain a positive view on the gold market," a note from BarCap says, "but given gold's outperformance during risk on intervals and our [foreign exchange] strategists' expectation for the Dollar to strengthen beyond three months, we are revising down our forecast for 2013 modestly."
Over in Europe, discussions on a common Eurozone budget and coordination of economic reforms among Euro members were put back until June next year Friday.

European Council president Herman van Rompuy issued a statement from the European Union summit in Brussels saying he will "present possible measures and a time-bound road map" at a summit in June next year.

Eurozone inflation meantime fell to 2.2% last month, down from 2.5% in October, according to official figures published this morning. US consumer inflation data are due to be published at 08.30 EST.

Demand to buy gold in physical bullion form has seen a resurgence in recent weeks, according to Standard Bank's proprietary Gold Physical Flows Index.

Gold importers in the world's biggest gold buying nation India continued to stock up Friday, newswire Reuters reports, to ensure adequate supplies for the wedding season.

"People feel this is a good buying opportunity as prices could jump another 1000 Rupees [per 10 grams]," says Harshad Ajmera at JJ Gold House.

Activity in China's manufacturing sector meantime looks set to expand at a stronger pace this month compared to November, according to the provisional 'flash' purchasing managers index published by HSBC Friday.

China's silver market meantime is "expected to achieve even further growth in coming years" on both the demand and supply side following a decade of rapid expansion, according to a report produced by precious metals consultancy Thomson Reuters GFMS and published by the Silver Institute Thursday.

"China is now the world's second largest silver fabricator and is likely to become the second largest producer, with its share of global demand and supply standing at 17% and 14% respectively," the report says.

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.

Ben Traynor Archive

© 2005-2016 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

Catching a Falling Financial Knife