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 Corrects After Recent Bullish Run as Iran Tests Long-range Shahab-3 Missile

Commodities / Gold & Silver Jul 09, 2008 - 07:56 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE OF GOLD gave back a 1% rally in London on Wednesday, trading $20 per ounce below this time last week as crude oil managed only a slight bounce on news of an Iranian missile test.

Already subject to international sanctions over its nuclear research program, Tehran said today it successfully fired a Shahab-3 missile overnight, capable of reaching Israel.


Crude oil prices initially jumped 1.7% after losing more than $4 per barrel on Tuesday. Gold Prices rose to $925 per ounce.

Iran should "refrain from further missile tests if they truly seek to gain the trust of the world," said a White House spokesman today.

But "the bullish run [in Gold ] which started mid-June is running out of steam," believes Phil Smith, writing in Mumbai for Reuters India.

"After such a steep rally a correction is likely."

Both Gold and oil slipped back as Wednesday's New York opening drew near, while European equity markets bounced 1% on average.

World equities remain more than one-fifth lower for 2008 to date, however.

"With fears about a global economic slowdown re-surfacing in financial markets," writes Manqoba Madinane for Standard Bank in Johannesburg, "this could put precious metal investment demand under more strain – given that commodity investment demand has been anchored by rising global inflation expectations."

Today's economic data pointed to yet further economic and inflationary pressures right across the developed world.

In Australia – where Macquarie Group is hoping to sell A$381 million of low-documentation mortgages on the securities market – investment lending fell almost 7% in May from April.

Last month in Japan, machine tool orders fell sharply, down 2.7% against the 1.4% growth forecast by Tokyo analysts.

Here in the UK, shelf prices in retail stores rose 2.5% year-on-year, meantime, led by a 7% jump in food.

"The sustained underlying strength of Monetary and Credit Expansion in the Euro area over the past few years has created upside risks to price stability," said Jean-Claude Trichet, head of the European Central Bank (ECB) in his monthly testimony to the European Parliament today – currently convened in Strasbourg, some 280 miles from its other home in Brussels.

"Over recent quarters, these risks appear to have become manifest as inflation has trended upwards," Trichet went on, attempting to defend last Thursday's decision to raise ECB interest rates for the first time in 13 months.

Last weekend the Spanish prime minister, Jose Luis Rodriguez Zapatero, said "more prudence is advisable" in ECB policy. Economists from Bank of America to Madrid's Circulo de Empresarios now forecast a Spanish recession in the second-half of 2008.

"There are too many headwinds for the Eurozone economy," believes Martin van Vliet at ING in Amsterdam. "We're seeing signs of the German export machine starting to splinter."

Germany's trade surplus shrank in May and France's deficit in goods yawned to a new record as the surging price of Euro-denominated goods cut exports on the world market.

The UK trade balance worsened yet again, meantime, reaching minus £4.2 billion ($8.3bn) in May as the surplus on services sold overseas fell by 8%. In physical goods, the volume of imports outweighed exports by £7.5 billion ($14.7bn) – more than 7% of the entire UK economy.

Ahead of Thursday's interest-rate decision from the Bank of England, however, the British Pound held steady on the forex market.

The Gold Price in Pounds Sterling slipped into the lower end of this week's range, trading at £466 per ounce by lunchtime in London.

The FTSE100 index of Britain's leading equities bounced, meantime, regaining 63 of the 567 points it's lost over the last five weeks and adding 1.1% to 5,501.

Meantime in the Gold Mining sector, Newcrest Mining – Australia's No.1 independent gold miner – admitted it spent 11% more than anticipated on closing it "hedge book" last month.

Newcrest followed fellow Aussie miner Lihir in buying back of forward sales of gold made during the gold bear market of the late 1990s and beyond.

The Gold Price has risen by more than 140% since then against the Australian Dollar.

Across in Central Africa, Banro Corp.'s latest feasibility study from the open-cast Twangiza project in the Democratic Republic of Congo (DRC) shows that moving into production will cost US$200 million more than expected.

CEO Mike Prinsloo reports that the $581m project contains more than 3.7 million ounces of measured and indicated gold resources – "impressive in an industry aching for new, well-sized gold projects," as Tim Wood notes at Resource Investor.

Looking to raise the necessary funds later this year, Banro would expect Twangiza to reach production sometime in 2011. The extra costs would be driven by the need for a hydro-electric plant to supply power – a major infrastructure expense now starting to hit gold miners in South Africa, formerly the world's No.1 gold-mining nation.

Global gold mining output has ticked lower throughout this decade, despite the surging Gold Price , as a lack of investment during the 20-year bear market – plus a shortage of new discoveries coupled with concerted green lobby campaigning – crimps new development.

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