Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Gold Recovers One-Third of "Bernanke Plunge"

Commodities / Gold & Silver Jun 04, 2008 - 09:43 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES recovered one-third of yesterday's $18 plunge early Wednesday as crude oil slid to a three-week low and European equity markets dropped 2%, led lower by mining and banking stocks.

The Euro ticked higher against the Dollar, regaining a quarter of Tuesday's two cent plunge.


That fall was also sparked by Ben Bernanke, chairman of the Federal Reserve, noting the inflation risks posed to the United States by its weak currency.

"Bernanke's remarks strengthened speculation that the Fed may not cut interest rates further," says Shuji Sugata at Mitsubishi Futures & Securities in Tokyo , "preventing investors from putting money into commodities."

"With interest rate futures now pricing in a 98% probability of the Fed holding rates constant this month," agrees Manqoba Madinane in today's Gold Market note from Standard Bank, "plus a 30% probability of increasing rates by 25 basis points in October, we see the Dollar well supported in the near term.

"That could further contain near-term precious metals demand.

"Furthermore, equity index futures are also pricing in near-term gains in the US and Asia , which could see money flowing into equities."

Money flowed out of European stock markets on Wednesday, however, with the Cac40 in Paris and FTSE100 in London both losing 2% by lunchtime.

US stock futures pointed lower after the Financial Times said that Lehman Brothers – the fourth-largest US bank – lost $500-$700m in the last three month on "certain hedging positions".

The Wall Street Journal reports that, contrary to Lehman's own statements, the bank is looking to raise fresh capital from big foreign investors, already approaching "at least one" fund in South Korea .

The central banks of both Sweden and Norway warn that "the [subprime] turmoil has spread to new assets, markets and participants. The uncertainty...will probably persist for a long time to come."

Here in the United Kingdom , "ongoing economic weakness in 2009 would argue against fiscal restraint," says the Organization for Economic Co-Operation & Development (OECD) in its latest UK report. But "the government's options have been limited by excessively loose fiscal policy in past years when economic growth was strong."

The OECD forecasts a 10% drop in UK house prices by the end of 2009. Today the British Pound slid to a two-week low beneath $1.9535, helping the Gold Price in Sterling move back above £450 per ounce.

"It looks to me as if foreign central banks and sovereign wealth funds are losing faith in the UK," said Michael Saunders at Citigroup yesterday after the Bank of England reported non-residents selling gilts and Treasury bills at the fastest rate in five years.

Foreign investors funded some two-thirds of the UK 's current-account deficit between 2005 and 2007, Saunders told the Financial Times .

"I would say Gold is still in a range of $850 to $900 for the time being," said a dealer in Hong Kong to Reuters overnight, "We are all waiting for Friday's [official] US non-farm payrolls data."

Today brings the monthly ADP report of private-sector US payrolls, expected to show a loss of 30,000 jobs in May.

Early today the Mortgage Bankers Association (MBA) reported a 15% drop in US mortgage approvals for last week. Compared with the final week of May 2007, approvals stood 20% lower.

As the New York opening drew near, 10-year US bond yields slipped to 3.86% and two-year yields fell to 2.39%.

The rate of consumer-price inflation in the US was last pegged at 3.9%.


Tuesday's two per cent plunge in the Gold Market came after Fed chairman Bernanke said that the plunging US currency might lead to inflation inside the United States – a "highly unusual" move, as John Authers notes for the FT , "since the Fed does not have responsibility for the Dollar.

"That was taken as a hint by the foreign exchange market that government intervention could be on the way."

The drop also came as trading began in options on New York's GLD exchange-traded gold fund – formerly known as the StreetTracks ETF and now called SPDR.

"Trading got off to a fairly solid start," notes Chris Tyler for Optionetics, "although much of the activity had the earmarks of institutional players."

The most active contracts – "sporting a slightly bearish outlook" – were put options dated for July and Sept. They give their owners the right to sell the GLD fund at an equivalent Gold Price of $850 an ounce.

December puts pricing gold at $770 an ounce also saw volume exceed 2,000 contracts.

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

6 Critical Money Making Rules