Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Some Traders Hit. Some Traders Miss. Here's How to be Part of the 1st Group - 22nd Nov 17
Geopolitical Risk Highest “In Four Decades” – Global Gold Demand to Remain Robust - 22nd Nov 17
Relationship between Crude Oil Price and Oil Stocks - 22nd Nov 17
Harry Dent’s Gold Prediction Invalidated - 22nd Nov 17
Gold Sector is On a Long-term Buy Signal - 21st Nov 17
Saudi Arabia and Israeli Alliance Targets Iran - 21st Nov 17
What History Says for Gold Stocks in 2018-2019 - 21st Nov 17
US Bond Market Operation Twist by Another Name and Method? - 21st Nov 17
Learning from Money Supply of the 1980s: The Power and Irony of “MDuh” - 20th Nov 17
Trump’s Asia Strategy, Goals and Realities - 20th Nov 17
Crude Oil – General Market Link - 20th Nov 17
Bitcoin Price Blasts Through $8,000… In Zimbabwe Tops $13,500 As Mugabe Regime Crumbles - 20th Nov 17
Stock Market More Correction Ahead? - 19th Nov 17
Universal Credits Christmas Scrooge Nightmare for Weekly Pay Recipients - 18th Nov 17
Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom - 18th Nov 17
Facebook Traders: Tech Giant + Technical Analysis = Thumbs Up - 18th Nov 17
Games Betting System For NCAA Basketball Sports Betting - Know Your Betting Limits - 18th Nov 17
Universal Credit Doomsday for Tax Credits Cash ISA Savers, Here's What to Do - 18th Nov 17
Gold Mining Stocks Fundamentals Q3 2017 - 17th Nov 17
The Social Security Inflation Lag Calendar - Partial Indexing - 17th Nov 17
Mystery of Inflation and Gold - 17th Nov 17
Stock Market Ready To Pull The Rug Out From Under You! - 17th Nov 17
Crude Oil – Gold Link in November 2017 - 17th Nov 17
Play Free Online Games and Save Money Free Virtual Online Games - 17th Nov 17
Stock Market Crash Omens & Predictions: Another Day Another Lie - 16th Nov 17
Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe - 16th Nov 17
Announcing Free Trader's Workshop: Battle-Tested Tools to Boost Your Trading Confidence - 16th Nov 17
Instructions to Stop a Dispossession Home Sale and How to Purchase Astutely at Abandonment Home - 16th Nov 17
Trump’s Asia Tour: From Old Conflicts to New Prospects - 16th Nov 17
Bonds And Stocks Will Crash Together In The Next Crisis (Meanwhile, Bond Yields Are Going Up) - 16th Nov 17
A Generational Reset That Will Redistribute Wealth to the Bottom 60% Is Near - 16th Nov 17
Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - 16th Nov 17
Gold’s Long-term Analogies - 16th Nov 17

Market Oracle FREE Newsletter

Traders Workshop

Gold Weak Despite Japan to Print and Spend to Infinity

Commodities / Gold and Silver 2012 Dec 17, 2012 - 07:39 AM GMT

By: Ben_Traynor

Commodities

THE WHOLESALE gold bullion price rose to $1693 per ounce during Monday morning's London trading, but remained slightly below where it ended last week following falls in Asia, where the Yen opened sharply lower against the Dollar before recovering some ground following the result of Japan's general election.

"Gold is continuing to trade below the psychologically important threshold of $1700," says a note from Commerzbank.


"There are signs that the current price weakness is not sustainable, however, and we envisage prices climbing significantly again in the medium term."

Silver meantime hovered around $32.20 an ounce this morning, a few cents off Friday's close, while stocks and commodities were little changed on the day.

"Participation is really low right now," one Hong Kong trader told newswire Reuters this morning.

"It hasn't been a very exciting year for most people and I don't think they want to stick around for the last week and a half. People want to put away everything before starting on a totally clean slate in 2013."

"For 2013 we expect principally similar supporting factors [for gold] as in 2012," says a note from refiner Heraeus.

"Low interest rates, monetary policy measures by central banks, fear of inflation, purchases by central banks, recovered demand from India as well as increasing demand from China."

Over in Japan, the Liberal Democratic Party won Sunday's general election, gaining a so-called supermajority of two-thirds of the lower house of parliament, which will allow it to block decisions made by the upper house.

"The LDP's landslide election victory gives it a virtually free hand in policy," says Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities.

"The macro[economic] stance will shift to 'print and spend.'"

During the election campaign LDP leader Shinzo Abe, who will now become Japan's prime minister for the second time, called on the central bank to adopt an "unlimited" Yen policy to fight deflation.

"It is very unusual for monetary policy to be a focus of attention in an election," Abe said Monday following his victory.

"But there was strong public support for our calls to beat deflation...I hope the Bank of Japan takes that into account."

BoJ policymakers meet on Wednesday and Thursday this week to discuss the latest monetary policy decision. Abe said that after he has formed his cabinet next week, his government will issue a joint statement with the BoJ which will include a 2% inflation target for the central bank – double the current target.

In Washington meantime, Republican House of Representatives speaker John Boehner has said he will consider raising tax rates for people earning more than $1 million a year. President Obama has said he wants the income threshold for higher taxes to be lower, at $250,000 a year.

Boehner has also offered to remove the subject of the debt ceiling from the debate for a year, according to US press reports Sunday.

The US government is expected to hit the current $16.4 trillion debt limit in early February next year. In August last year, ratings agency Standard & Poor's stripped the US of its AAA credit rating after negotiations to raise the previous limit continued without agreement until the limit was hit.

The ongoing lack of agreement on the fiscal cliff "will likely leave investors somewhat at a loss as to what they can expect heading into the year-end," says Edward Meir, precious metals analyst at brokerage INTL FCStone.

"At this stage of the game, we would welcome a broad multi-market retrenchment over the course of this week, as it may finally nudge the politicians towards a badly-needed compromise. However, should we get a sell-off, we suspect gold will be caught up in the resulting downdraft."

The difference between bullish and bearish contracts held by Comex gold futures and options traders – known as the speculative net long – gained slightly in the week ended last Tuesday, weekly data from the Commodity Futures Trading Commission show.

The data do not however cover gold's price drop that began Wednesday last week.

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

© 2005-2017 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