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
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
S&P SEASONAL ANALYSIS - 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 Strong on Crude Oil New All Time High

Commodities / Gold & Silver Apr 15, 2008 - 11:14 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE OF GOLD rose to a four-session high in Asian and London trade on Tuesday, gaining almost 1% overnight as world stock markets crept higher and US bond prices rose.

Crude oil jumped to a fresh record high above $112.80 per barrel.


"Market participants are still very much on the long side," said one Singapore Gold Dealer to Reuters earlier. "We need to see fresh buying from [investment] funds to bid gold up to above $940."

The latest Commitment of Traders report from the US gold futures market shows the "large absence of any fresh buying" agree analysts at Mitsui, the precious metals dealer.

But "we haven't ruled out a $1,000 print in April," they go on. "Indeed, the 20% decline in the global [futures, options and trust-fund] position over the last four weeks indicates ample room for investors to re-enter the market before we can begin to all it frothy again."

The biggest bullion banks in London today set the AM Gold Fix at $931.75 per ounce, up more than 2.7% from last Wednesday's low.

For French, German and Italian investors wanting to Buy Gold today, the AM Fix was set above €588 per ounce, its best Morning Fix so far this month.

"The forces that have propelled Gold for the past five years are intact, if not intensifying," said Citigroup analyst John Hill in a note Monday.

"Central-bank policy prescriptions for the credit crisis are uniformly re-flationary."

Inflation for US manufacturing businesses will be reported later today, and "a higher-than-expected PPI statistic would decrease the probability of further aggressive Fed easing on April 30th," according to Manqoba Madinane and Walter de Wet at Standard Bank in Johannesburg.

"That may put downward pressure on precious metals...but we still see near-term upside potential for the [Gold Market] in tightening liquidity conditions, as indicated by rising interbank lending rates that signal ongoing financial markets stress."

( Why do Interest Rates & Risk Matter to Gold ? Read on here... )

Fed governor Kevin Warsh – at 38, the youngest member of the Open Market Committee and previously an M&A specialist at Morgan Stanley and then economic advisor to the US president – spoke yesterday of "a striking decline in confidence in the financial architecture itself.

"Perhaps an analogue to banking systems without deposit insurance is appropriate," he told the Global Economic Policy Forum at NYU's School of Law. "Depositors withdraw funds if they believe others will act similarly.

Charting the boom in securitized debt investment, "the script was rewritten [in early 2008] so that product innovation flowed, but this time from the public authorities. [But] in my view, public liquidity is an imperfect substitute for private liquidity."

The Bank of England today injected £15 billion ($29.5bn) into the London money markets after the British prime minister, Gordon Brown, held an emergency breakfast meeting with commercial bank chiefs.

Three-month interbank lending rates were unchanged from Monday, however, at 5.93% – almost one per cent above the Bank of England's current overnight target.

The British Pound fell hard on the currency markets meantime – down 1.1% to the Dollar and reaching fresh record lows to the Euro – after official data showed consumer-price inflation holding flat at 2.5% year on year in March thanks to sharp discounting from furniture and kitchen retailers, plus a fall in the price of computer games.

Many economists then brought forward their forecast for the next Bank of England rate cut from June to May after the Royal Institution of Chartered Surveyors reported its worst survey of UK house prices since the RICS index began in 1978.

"Estate agents are still talking up the market to win [new] instructions," complains one surveyor in the affluent "stockbroker" commuter belt of Surrey, "[but] applicants are not taken in by asking prices. This practice will continue unless we see a reduction in the cost of borrowing."

Only 3% of the 285 professional surveyors interviewed saw a rise in their local house prices. Fully two-thirds reported a fall.

The US Dollar meanwhile held flat against the Euro and Japanese Yen, but the broad-based GSCI index of commodity prices rose 0.8% as soft commodities surged higher following US president George Bush's grant of $200 million in emergency food aid to poorer countries facing social unrest and food riots.

US rice futures today hit a new all-time high in response, standing more than twice above their level of last August – back when the Federal Reserve Began Slashing US Interest Rates .

"Asian rice prices have soared even more sharply since January," reports Bloomberg today, "as big importers rush to build up stocks on fears that supplies will become scarce as exporters clamp down on shipments."

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , 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 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