Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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

© 2005-2022 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