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

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


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

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 - 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