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
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
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 Back to $1,000 on ECB Inflation Busting Interest Rate Rising Plan

Commodities / Gold & Silver Jun 11, 2008 - 07:49 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES ticked higher in London trade early Wednesday, recovering 1.3% from yesterday's one-week low as crude oil jumped back to $133 per barrel.

Asian equities were mixed after the US Dollar retreated from a new 15-week high against the Japanese Yen above ¥107.70.


European stock markets held flat. Short-dated government bonds recovered from Tuesday's sharp sell-off, but corporate bond prices continued to fall.

The average yield on investment-grade bonds closed New York at 6.32% yesterday, the highest level since July 2002 according to Bloomberg data.

"There's a good chance that Gold may go back above $1,000 in the short- to medium-term," reckons Richard Davis at Blackrock, the investment group half-owned by Merrill Lynch.

"We're headed for inflationary times and gold has always been a safe asset to protect your wealth against inflation." ( Oh really? Get the facts on Gold vs. Inflation here... )

Today the price of corn rose for the sixth session running, pulling soybeans and wheat higher after the official forecast of US output was cut by 3.2% in response to the cold, wet weather still hitting the Mid West.

Ahead of today's US energy stockpiles report – due to show a drop of 1.5 million barrels for last week, taking the total "well below" the five-year average according to one Zurich-based trader – gasoline prices at the pump have now reached a record average of $4.05 per gallon according to the AAA and Oil Price Information Service.

Here in the United Kingdom , where tanker drivers could close 1-in-10 filling stations by striking over pay this weekend, the average price for unleaded petrol has breached £1.17 per liter.

Equal to $8.68 per US gallon, that's higher by one-fifth from this time last year.

But just like the US Federal Reserve and Bank of England in London – and despite its recent tough talk on inflation – not even the European Central Bank "is talking about a series of rate increases" said ECB member Juergen Stark this morning.

With Eurozone interest rates now only just ahead of consumer-price inflation at 4.0%, Stark's surprise comments left the Euro struggling below $1.55 to the US currency.

The Gold Price in Euros rose more than 1% to touch €565 per ounce.

"In our view Gold Prices are likely to trade in a range-bound fashion over the forthcoming months," says the latest analysis from Barclays Capital commodities team.

"Some external factors have become less supportive, such as the potential end of the Fed rate-cutting cycle.

"[But] heightening inflationary concerns and constrained mine supply will continue to support Gold."

The gold-mining industry has "fallen flat on its face" according to John Sayers, head of South African miner DRDGold.

Speaking at the Africa Mining Congress 2008 in Johannesburg yesterday, he said that poor returns to shareholders came thanks "in major part" to an industry-wide failure to focus on current operations rather than trying to grow reserves.

On the other side of the Gold Market , meantime, Indian and Middle Eastern bullion dealers report growing sales after the price spike of mid-March dented their traditionally strong spring season.

"Buying had slowly picked up in bullion markets," said Debjyoti Chatterjee of MAPE Admisi to the Economic Times of India overnight. "Traders do not [now] expect major price declines."

"People are buying more now, despite getting less in weight for their money than a few years ago," the Gulf Weekly quotes Khalid Ibrahim, branch manager in Bahrain for Atlas Jewelry.

"Gold remains a solid asset in my opinion."

Another gold dealer in Manama , Bahrain , believes that "people are buying more Gold because they fear facing even higher increases in the price in future."

Back on the forex market, meanwhile, the British Pound fell hard this morning, briefly sliding through $1.9500 on news that UK unemployment rose for the fourth month running in May after reaching 5.3% of the working-age population this spring.

Average earnings growth slowed to 3.1% annually – the 11th month of sub-inflationary growth since the start of last yea – while the UK 's trade balance continued to worsen.

Excluding services, the trade deficit in goods sank to -£7.6bn ($14.8bn).

Today the Gold Price in British Pounds recovered to £448 per ounce, rising 1.2% from Tuesday's two-week low but remaining more than 12% off the all-time record set in mid-March at £512.

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