Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Gold Loses $1 Trillion of Total Global Value, "Could Fall to $1050"

Commodities / Gold and Silver 2013 Apr 16, 2013 - 01:05 PM GMT

By: Ben_Traynor

Commodities

SPOT MARKET gold prices fell to a fresh two-year low in Tuesday's Asian trading, dropping to $1322 per ounce, before rallying back above $1386, as stock markets extended yesterday's losses.

Silver dropped to its lowest level since September 2010 at $22.10 an ounce before it too recovered some ground. Oil was down on the day by lunchtime in London, while copper ticked slightly higher.


Since Friday morning, the value of total above-ground stocks of gold bullion, estimated by metals consultancy Thomson Reuters GFMS at around 174,000 tonnes, has fallen by more than $1 trillion.

Based on PM London Fix prices in Dollars, gold on Monday was down 9% from the Friday afternoon fixing, the biggest one-day drop since February 28 1983, when gold dropped 12% in a day. That in turn was the biggest single day drop since January 1980, when gold fell more than 13% one day after hitting its then all-time high of $850 an ounce.

On a two trading day basis, gold was down almost 11% by Monday afternoon's fixing, with 1983 again being the last time gold saw steeper two-day drop. By comparison, gold fell more than 18% in the two days following the January 1980 high.

"The aftershock of the previous two trading days will likely continue today with investors caught off guard and now ready to press sell buttons in any renewed weakness," said one London-based trader this morning.

The CME Group, which runs the Comex exchange in New York on which gold and silver futures are traded, raised its margin requirements Monday, following a similar announcement by the Shanghai Gold Exchange. The gold margin, which determines the amount of collateral that must be posted to cover potential losses, was raised by 19%, while silver margins went up 18%.

"At some stage [the selling] will start to dissipate," adds David Govett at brokerage Marex Spectron.

"I am sure we will see a rally at some stage this week. But given the current mood, this will no doubt be sold into as soon as it runs out of steam... A major part of this fall has been the snowball effect of people attempting to pick lows and being forced out of positions in quick order. This will discourage any bargain hunting and gold's only hope rests with physical demand."

"We continue to see the potential for lower prices," says Tyler Broda at Nomura.

"The lack of investment demand so far in 2013 has pushed gold out of equilibrium and a price as low as $1050 an ounce is possible should we see significant disinvestment occur. We are now on this path, in our view."

The world's largest gold exchange traded fund SPDR Gold Trust (ticker: GLD) continued to see outflows Monday, though at a slower rate than on Friday, with holdings falling by 4.1 tonnes to 1154 tonnes, their lowest level since April 2010.

Since the start of 2013 the GLD has seen the amount of gold held to back its shares fall by nearly 15%.

The GLD's biggest holder, hedge fund boss John Paulson, has lost around $1 billion of his personal wealth since Friday morning as a result of gold's price drop, according to news agency Bloomberg.

"While gold can be volatile in the short term and is going through one of its periodic adjustments, we believe the long-term trend of increasing demand for gold in lieu of paper is intact," says an emailed statement from Paulson & Co. partner John Reade.

"Federal governments have been printing money at an unprecedented rate creating demand for gold as an alternative currency for individual and institutional savers and central banks alike."

Along with gold and silver, industrial commodity prices fell Monday, while stock markets also traded lower.

"Weaker-than-forecast data releases in China and the US weighed heavily on market sentiment," says a note from Credit Agricole, "supporting the theory that the global economy is repeating the pattern of first-quarter strength followed by weakness over the remainder of the year."

Here in the UK, inflation remained steady at 2.8% last month, according to figures published Tuesday, while Eurozone core consumer price inflation ticked higher to 1.5%, up from 1.3% in February.

Economic sentiment in Germany and across the Eurozone as a whole meantime has fallen this month, according to the ZEW survey.

Italy should look to use some of its gold reserves to recapitalize its banking system, Il Sole 24 Ore reports. The report cites proposals to use the gold to back a so-called EuroUnionBond rather than selling it.

Gold market development organization the World Gold Council has argued that governments should consider using gold to back bond issues, and last month commissioned a poll that found 91% of Italian business leaders and 85% of citizens agree that the country's gold reserves should play a part in economic recovery.

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 2013

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

© 2005-2019 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

6 Critical Money Making Rules