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
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Ticks Higher on Nigeria Crude Oil Blockage

Commodities / Gold & Silver Apr 22, 2008 - 09:10 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES ticked higher in the first-half of London trade on Tuesday, holding 0.6% above Monday's low of $912.50 per ounce as crude oil rose to a new record high and government bond prices fell sharply, pushing longer-term interest rates higher.

Mining and oil stocks rose in Europe, but banking shares fell after a private-sector rescue of a leading "pfandbrief" lender to Germany's federal-state governments.


Here in London, Royal Bank of Scotland announced Europe's biggest-ever rights issue in a bid to repair its balance sheet.

Looking to raise £12 billion ($24bn), RBS will offer stock at a 46% discount to Monday's closing price.

"Worse-than-expected financial results at Bank of America [on Monday] reignited US credit market crisis concerns," note Walter de Wet and Manqoba Madinane in their Gold Market report for Standard Bank today.

"[But] this failed to drive precious metal alternative investment demand, indicating that investors are possibly preferring to hold cash."

Supporting this view, they point to Monday's drop in US bond prices, even as global equity markets fell.

"The US economy is still weak, and indirectly that's positive for gold," counters Bernard Sin, head of Gold Trading in Geneva for MKS Finance, the precious metals refiner.

Tuesday's early gains, he believes, showed "people are pre-empting next week's Fed meeting" – widely expected to deliver another 0.25% cut to the cost of Dollars.

In Europe, in contrast, Christopher Noyer today became the fourth ECB policy-maker in two days to hint that the European Central Bank will soon raise its key lending rate to tackle inflation.

Last month saw the cost of living in the 15-nation Eurozone rise at its fastest pace since 1992. Growth in the European money supply – formally a key target for ECB policy – is running at a three-decade record.

"We'll do what it takes [to] make sure inflation falls back below 2% next year," Noyer claimed on RTL radio in Luxembourg today, and his comments sparked a fresh surge in the Euro, pushing it back towards last week's new all-time high above $1.5960 against the Dollar.

Crude oil meantime rose above $118 as Royal Dutch Shell confirmed the loss of 160,000 barrels in daily supply after militant attacks in Nigeria, the world's eleventh-largest producer.

"Despite the strong oil price and Euro [however] – the two main factors that have been driving the recent price moves – Gold has failed to consolidate any recent gains," says today's note from Mitsui, the precious metals dealer.

"The outlook for precious metals is the least bullish it has been for some weeks."

Noyer's comments also sparked what one analyst called a "massive unwinding" in European government-bond portfolios today, pushing longer-term interest rates higher.

Four-year German bund yields today rose above 4.0% – the ECB's current overnight target – for the first time since November. Two-year UK gilt yields were pushed 13 basis-points higher to 4.47%.

This sell-off also added to the pressure on US Treasury bonds, already dented by Wednesday's looming auction of $30 billion in new two-year notes.

The yield offered by two-year Treasuries jumped this morning to a 3-month high of 2.21%, picking up from March's 30-year record low after accounting for inflation of minus 2.70%.

Hunting around to beat the upturn in open-market interest rates, the Royal Bank of Canada today said it has sold US$300 million in three-year bonds to Japanese investors, paying a yield of just 1.77%.

These new "samurai bonds" – priced some 0.7% above the inter-bank lending rate for Japanese Yen – will cost RBC less than half what it would pay to domestic Canadian savers.

Meantime in Germany, the Düsseldorfer Hypothekenbank – a family-owned German bank that lends to the national and federal governments – became the third Düsseldorf bank last night to need rescuing since the global credit crunch began in August.

In common with 33 other German banks, the Düsseldorfer Hypo raises funds by selling "pfandbrief" – a form of collateralized bank debt. The private-sector Association of German Banks (BdB) has now stepped in to take control of its assets.

First issued in 1769, pfandbrief make up 44% of the total world market in covered bonds according to the German Association of Pfandbrief Banks (VPD).

Holding just 0.5% of its assets in mortgage-debt outside Germany, the Düsseldorfer Hypo grew its total assets by 36% between 2005 and 2006 to post net profit of €22 million.

Last year's profit fell to €100,000. The Schuppli family injected €100 million into the bank in February.

"We don't have any liquidity problems and our operations are still trading in the black," claimed Wolfgang Hampel, a managing director at the bank, speaking to the FT Deutschland today.

But the rescue "is pretty dramatic" says an analyst at Landsbanki Kepler in Frankfurt.

"German banks still have the advantage that they can raise money with Pfandbriefs. So it's a necessary step to stabilize the lender and protect the Pfandbrief market."

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