Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Plunges 3.4% on Dollar Rallies, Rising Banking Stocks on Bad News

Commodities / Gold & Silver Apr 18, 2008 - 10:19 AM GMT

By: Adrian_Ash

Commodities Gold Plunges 3.4% on Dollar Rallies, Rising Banking Stocks on Bad News
SPOT GOLD PRICES dumped 3.4% to $912 per ounce in the first-half of London trade on Friday, falling to a five-session low of $916 per ounce as both commodity and bond prices fell, but European stock markets rose.

Crude oil dipped one dollar from yesterday's new record high above $115.50 per barrel as the US currency rallied from new record lows in the forex market.


The Euro dropped two cents from Thursday's high of $1.5964, while soft commodity prices dropped around 1% on average.

Rice jumped yesterday above $1,000 per tonne for the first time ever on news the world's largest rice importer, the Philippines, failed for the fourth week running to buy as much rice as its government bid for.

Bangladesh failed to secure any rice imports this week, says the Financial Times .

"Gold has [had] a little bit of help from the Dollar," says Jeremy East, head of the commodities desk at Standard Chartered in London , "as the currency looks like it's heading towards $1.60 vs. the Euro.

"One can also argue for [ Gold as] an inflation hedge," he believes. ( Really? Get The Facts About Gold in this Free Gold Report ... )

Today the Euro pulled back 1.6% from Thursday's new record high of $1.5962.

It also dropped 2.1% against the previously weak British Pound, falling to a two-week low despite a surge in Germany's producer price index for March – news that would support the ECB's decision not to cut interest rates.

"We continue to expect Gold Prices to trade inversely with the US Dollar given gold's currency-like properties of being a store of value and a medium of exchange," says Jeffrey Currie, an analyst at Goldman Sachs.

He raised the bank's Gold Price forecast from $850 to $920 and above for the next six months.

Spot Gold has averaged $924 per ounce so far this year.

Alongside the drop in Gold Market prices today, government bonds – the "safe haven" of choice for institutional investors since the banking crisis began last summer – headed for their biggest fall in more than four years according to Bloomberg data.

German bund prices fell almost 1% this morning after Nout Wellink, a member of the European Central Bank's governing council, said he saw "no dampening of inflation" ahead.

Followed Wednesday's news that Eurozone consumer prices rose 3.5% in the year to March – plus Eurogroup chairman Jean-Claude Juncker saying on Thursday that volatility and strength in the EUR/USD exchange are "undesirable" – Wellink's comment dented what few hopes remained for lower ECB interest rates anytime soon.

Bond traders pushed the yield on two-year bunds up to 3.73%, some 33 basis points higher for the week. Japanese bond prices closed lower in Tokyo for the third week running after new Bank of Japan chief Masaaki Shirakawa also dashed hopes for a rate-cut, repeating his view that "moderate growth" will soon return but consumer prices will also keep rising.

The Bank of Japan has held its target interest rate at 0.5% since March 2007. It's been held below 1.0% since 1995 as Japan has struggled to climb out of the depression caused by its late '80s real estate and financial boom.

By the Wall Street open today, 10-year US Treasury yields stood 27-basis points higher from Monday's start, trading up to a six-week high of 3.77%.

The 10-year yield hit a five-year low of 3.34% this time last month.

Here in London , the British government today reported a record public-sector borrowing figure for March of £10.2 billion ($20.2bn).

The UK Treasury is now looking to issue up to £50 billion ($99.5bn) in new government gilts, the Financial Times reports, so the Bank of England can lend them to private banks unable to raise funds in the open market.

The banks will be able to park their hard-to-sell mortgage and credit-card bonds at the Bank of England, using the government bonds lent in return as collateral for cash loans elsewhere.

Shares in the FTSE banking sector – down by more than one-fifth from April 2007 – rose today on rumors of a £10 billion ($19.9bn) rights issue from the UK's second-largest bank, the Royal Bank of Scotland. Its shares rose 2.5% today.

Citigroup reported a $5.1 billion loss for the first quarter in New York this morning. Its stock rose 4% in pre-market trade.

Overnight, the NY attorney-general subpoenaed 18 Wall Street banks and securities dealers in his investigation into the "auction-rate" market – a move suggesting that "somebody has made up their mind there really were abuses" in the way these high-yield securities were marketed and sold to retail investors, says one former US regulator.

The $330 billion auction-rate market – in which US municipalities, student-loan companies and money-market-style funds raise capital – effectively shut down in February, "leaving some issuers paying rates as high as 20% and investors frozen in the debt," according to Bloomberg.

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

© 2005-2019 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