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
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Gold Price Forecasts Cut by Bank Analysts Again as US Fed Tries to Temper "Taper Talk"

Commodities / Gold and Silver 2013 Jun 25, 2013 - 02:07 PM GMT

By: Adrian_Ash

Commodities

PRECIOUS METALS rallied in London on Tuesday morning as European stock markets also bounced with commodity prices.

Gold and silver recovered half of yesterday's 1.7% and 3.1% drops respectively.

The US Dollar eased back on the currency market, as did major government bond yields.


"The gold price [is] trad[ing] erratically without any clear direction," say London bullion dealers Standard Bank in their daily note, "due to residual concerns over the Fed's likely reduction in monetary stimulus, coupled with growing concerns over Chinese banking liquidity."

The People's Bank of China said today it has lent short-term money to some institutions to keep money-market interest rates at a "reasonable level" – its first statement of action since short-term rates in Shanghai spiked above 10% earlier this month.

"There's room for further [gold] price declines before a meaningful consolidation," writes bullion market-maker Scotia Mocatta's strategist Russell Browne.

"Our target for the move is $1155-1156, and there are no big levels of support between here and there."

After major bank analysts last week cut their silver price forecasts, London bullion bank HSBC yesterday cut both its 2013 and 2014 gold price forecasts by 10%, down to $1396 and $1435 per ounce respectively.

"Clearly, recent market events show we did not cut [forecasts] enough" in previous revisions, HSBC added.

Fellow market-maker Deutsche Bank meantime cut its 2013 gold price forecast by 7% to $1431 per ounce, while Morgan Stanley cut its forecast by 5% to $1409.

"This year has seen a significant change in fortunes for the gold market," says Deutsche, "driven by a turn in the US interest rate cycle, an increasingly bullish outlook for the US Dollar and a reallocation among global investors from fixed income into equities."

With foreign money being pulled from investments in India – the world's No.1 market for physical gold – the possible end of US quantitative easing "[is a] big negative for the Rupee as flows dwindle further," says Religare Capital Markets in a note from Mumbai.

Russian government debt today rallied from a sell-off which drove interest rates up to an 18-month high.

Russia added to its gold reserves for the 8th month running in May, new data from the International Monetary Fund showed Tuesday, taking it 996 tonnes – the 7th largest national hoard, ahead of Japan and behind Switzerland.

Gold buying by emerging-market central banks "is one of the underpinnings for gold in the long term," reckons ANZ analyst Victor Thianpiriya.

Amongst Asian households and investors, however, "There is only a slight improvement in demand right now due to the price drop," Reuters today quotes Dick Poon at German refining group Heraeus' Hong Kong office.

"It's definitely not up to April levels. Part of the reason is weak seasonal [gold] demand. But economic factors and China growth are also hurting."

Longer-term says new analysis from Barclays bank, "The US cyclical position continues to look relatively healthy versus other developed market countries, where central banks are either in easing mode or are not expected to tighten policy any time soon."

"We expect the Dollar rally to broaden as the second half of 2013 progresses," writes the New York head of FX research at Barclays, Jose Wynne.

"Anybody who holds gold in Dollar terms," said trader and newsletter advisor Dennis Gartman to CNBC Monday, "finds himself in a very uncomfortable position."

"Gold needs fuel, [it] needs monetary aggressiveness to push it up."

US Fed chairman Ben Bernanke said last week that the central bank may start 'tapering' its quantitative easing, and perhaps end the program by mid-2014.

Provided that inflation stays low and the US Dollar is strong, says Swiss bank UBS in a note, "Investors are likely to regard QE-insurance [meaning gold] as obsolete."

"You don't walk up to a lion and flinch," said Dallas Fed president Richard Fisher in a speech in London on Monday, commenting on the sell-off in all asset classes following Fed chairman Bernanke's comments.

"Big money does organise itself somewhat like feral hogs," said Fisher. "If they detect a weakness or a bad scent, they'll go after it."

Fisher added, however, that the word "exit" is "not appropriate."

Speaking at a separate event Monday, non-voting Fed member Narayana Kocherlakota of the Minneapolis Fed said the US central bank "[has to] hammer it every time we talk about policy" that interest rates will stay "highly accommodative...for a considerable time after the asset purchase program ends and the economic recovery strengthens" – a key phrase from recent Federal Reserve statements.

Although interest rates and central-bank asset purchases "must return to more normal conditions at some point," said outgoing Bank of England governor Mervyn King to the UK parliament today, "that point is not today."

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Formerly 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 www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(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.

Adrian Ash 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