Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold New Record High As Dollar Collapses

Commodities / Gold & Silver Feb 29, 2008 - 09:45 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES slipped back from an overnight record high above $975 per ounce in London on Friday, setting a new all-time high at the AM Fix as the global bid for physical assets contrasted with another down day for listed stocks.

The Gold Price in Pounds Sterling also set a new record Fix at £488.87 per ounce, while the Euro gold price was capped at its fourth highest level.

One ounce of Gold cost €637.58 this morning, more than twice what it cost French, German and Italian investors to Buy Gold last Feb 29th, back in 2004.

"Concerns over the weaker Dollar and inflation prompted investors to pour money into commodities such as soybeans and wheat as well as base metals and oil," said one Tokyo analyst to Bloomberg after the Nikkei closed the day 3.1% below Wednesday's six-week high.

"The US Dollar is falling precipitously and that's a major boost for gold," agrees Wallace Ng, chief precious metals trader at Fortis Bank in Hong Kong .

"We saw funds continue to pile into gold."

By lunchtime in Frankfurt the German Dax index stood 1.5% lower for the day, led down by export shares as the European single currency held near a fresh all-time high above$1.5220.

Today in Asia the Dollar hit a three-low against the Japanese Yen at barely ¥104.00 per greenback, despite currently offering cash savers 250 basis points more in interest per year than the Japanese currency.

"In my heart and soul, I just know and believe that a strong Dollar is in our nation's interest," joked US treasury secretary Hank Paulson in Chicago yesterday. But nobody laughed according to today's press reports.

"Our economy, like any other, is going to have its ups and downs," he went on – neglecting to mention the Fed's now wildly negative interest rates after inflation – "but I believe our economy is going to continue to grow this year and that our long-term competitiveness is going to be reflected in the value of the Dollar."

The US Dollar closed Thursday at a new all-time low of 71.67 on its trade-weighted index, down 1.6% for this year so far and more than one-quarter below its level of Feb. 2003.

The chance of another 0.75% cut in US rates when the Fed meets next month – only the second such easing since 1991, and the second under Ben Bernanke inside two months – rose to one-in-three according to futures betting at the Chicago Board of Trade when the Fed chairman spoke the Senate Banking Committee on Thursday.

"Treasuries started rallying on the back of some truly appalling data, and Bernanke's comments on bank failures spurred the flight to quality," notes Stuart Thomson, manager of $46 billion in bonds at Resolution in Glasgow , Scotland .

Prior to Bernanke's testimony on the economy, the odds of a cut to 2.25% on the Fed Funds rate were just one-in-ten. Now "we're in line for a strong rally in Treasuries," Thomson believes, and government bonds rallied worldwide this morning, finishing their best week in 18 in Tokyo , where five-year Japanese Government Bonds ended the day yielding less than 1.36%.

"It's the flight to quality," agrees Xinyi Lu, chief strategist for treasury investments at Mizuho in Tokyo . But with inflation in the cost of living now rising quickly across the world – and in all currencies, even the super-strong Euro – the "quality" of fixed-income bonds may prove to be a fake.

US crude oil futures rose above a new record of $103 per barrel in London trade this morning after Israel 's deputy defense minister threatened Palestine with a "bigger holocaust" if militants continued to fire rockets across the border from the Gaza Strip.

The United Nations Security Council is meantime set to approve new sanctions against Iran tomorrow (Saturday) in protest at its on-going nuclear program, and while Turkey 's land offensive in northern Iraq may have ended according to an unconfirmed report from NTV in Ankara , fresh output problems hit European oil supplies overnight.

The Sullom Voe terminal in the Shetland Islands , Scotland , was closed due to high winds. Natural gas prices rose 17% on news of a fire at Royal Dutch Shell's terminal in Bacton, Norfolk – south-east England 's main connection to continental supplies.

In soft commodities US wheat futures headed towards their sharpest monthly gain since 1974 according to Bloomberg data, while soybeans hit a fresh life-time record at the Dalian Exchange in China .

Palm oil futures broke 4,000 Ringgit ($1,254) per metric ton for the first time ever in Malaysia .

"Most of the funds are buying inflation hedges such as gold, silver and oil," said one Singapore dealer today. "It's still a bull market, where hedge funds and banks buy precious metals."

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

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.

Adrian Ash Archive

© 2005-2022 - 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