Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
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
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Follows Oil and Euro Lower Ahead of FOMC Meeting

Commodities / Gold & Silver Apr 29, 2008 - 12:26 PM GMT

By: Adrian_Ash

Commodities THE PRICE OF PHYSICAL GOLD fell back in Asian and early London trade on Tuesday, undoing Monday's 1.1% gain as crude oil fell, stock markets were mixed, and government bonds ticked higher after the worst two weeks for US Treasuries since 1982.

"Everybody is waiting for the Fed," notes Ronald Leung of Lee Cheong Gold Dealers in Hong Kong . "I think Gold has to stay above these levels before it can charge higher again.


"The range is still the same at between $880 to $900 for today and tomorrow."

Gold Prices slipped today a three-session low of $886 per ounce at the AM Fix in London .

After slashing the cost of borrowing Dollars to almost minus 2.0% in real terms (after accounting for inflation), the Federal Reserve is expected to signal a pause after cutting another 0.25% off its key target rate on Wednesday.

"It's really a question of whether we are getting [enough] bang for the buck," said Dallas Fed president Richard Fisher – a dissenting voice at the last two Fed meetings – a week ago today.

"Clearly we're not. The system is sputtering."

But Bloomberg claims today that Fed chairman Ben Bernanke "is persuading investors that the financial markets are working again."

The newswire cites as evidence the 8.4% rally in the S&P stock index since the Bear Stearns rescue, plus last month's record sale of $45.3 billion in US corporate debt.

"In the near term, if [Bernanke] is a triage nurse, you have to say he's definitely stabilized the patient," says James Swanson, chief investment strategist of the $204bn funds at MFS Investment Management in Boston .

"That's what I'd call it, a triage nurse using radical procedures. But they worked. Whether they'll be proven right in the long run, I don't know."

The Fed's most radical remedy to date – the $29bn underwriting of J.P.Morgan's takeover of Bear Stearns in March – marks "the worst policy mistake in a generation," according to a former head of Fed monetary affairs.

Speaking at the American Enterprise Institute on Monday, Vincent Reinhart, who left the US central bank late in 2007, compared the current banking crisis – and the Fed's response – to both "the great contraction" of the 1930s' Great Depression and also "the great inflation" of the 1970s.

Back in the Gold Market , traders are "looking for further direction from the Fed meeting," said Gnanasekar Thiagarajan, at Commtrendz in Mumbai to the Economic Times of India today.

" Gold is not likely to make any significant moves before that."

But today's Nature Day holiday in Japan – followed by the looming May Day shutdown across continental Europe and Russia on Thursday – looks set to make for thin trade either side of the Fed's much-awaited decision.

"With technically neutral charts for the precious metals," adds Mitsui, the precious metals dealer, "it is difficult to see where the next move will come from."

"I think falling oil prices [have] triggered some selling," one Hong Kong Gold Dealer told Reuters this morning.

"We might see support at $880 level.

Crude oil dropped more than 1% to $117.85 per barrel Tuesday morning as the strike at Scotland 's Grangemouth refinery ended. A strike by senior staff in Nigeria continued to block production of 860,000 barrels per day for Exxon Mobil.

"People [also] started to Sell Gold because of a weakening Euro," the Hong Kong dealer went on. "The physical market is deserted after we saw pretty good demand from Southeast Asia yesterday."

The European single currency today sank to its lowest level since 4th April below $1.5540 after German and Euro-wide retail sentiment both showed a marked decline on the monthly Bloomberg purchasing managers' index.

That move kept the Gold Price in Euros in a tight range around €569 per ounce as the broad FTSE Eurofirst index of 300 blue-chip equities slipped 0.5%.

Germany 's largest bank, Deutsche, today reported its first quarterly loss in five years on credit-related write-downs of €2.7 billion ($4.2bn) in what the CEO, Josef Ackermann, called "the most difficult [market] in recent memory."

Across the world in Toyko, Daiwa Securities also booked its first quarterly loss in five years, losing $123.8 million in the first three months of this year thanks to credit-related losses.

Daiwa made $250m profit over the same period last year.

For British investors wanting to Buy Gold today, the price bounced to £449.50 per ounce from a two-day low of £446.15 as the Pound sank on news that UK mortgage approvals fell to the lowest number on record in March.

The Pound Sterling dropped 1.5¢ to $1.9730 after the Bank of England said the number of mortgages approved by UK banks last month fell 45% from March 2007.

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