Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Strong US Dollar Drives Gold Lower

Commodities / Gold & Silver Aug 13, 2008 - 08:20 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES gave back all of a 1.5% rally late-morning in London on Wednesday, dropping below $815 per ounce in thin but frantic trade as the US Dollar continued to rally against pretty much everything.

Crude oil ticked back above $113 per barrel – down almost 25% from its top of early July ahead of today's much-anticipated US inventory stockpiles report – while base metals continued to slide.


Asian share prices sank to a one-month low, dropping more than 2% in Tokyo after official data said the Japanese economy shrank between April and June, squeezed by falling exports to the United States.

European stocks fell 0.7% on average, erasing this week's gains to date.

"We've been surprised by the strength of the US Dollar rally over the past month," wrote a Goldman Sachs analyst to clients on Tuesday.

"Nevertheless, we believe the threat of rising inflation and the climate of general economic uncertainty remains constructive for Gold in the medium term."

Already trading more than 5% lower against the greenback from Monday last week, the British Pound today sank 2.5¢ inside one hour – sinking to its lowest level since Nov. '07 – on news of rising UK unemployment and slowing pay growth.

The Gold Price in Sterling bounced 3.5% from Tuesday's seven-month low to touch £437 per ounce.

The Euro also sank vs. the Dollar, falling back towards Tuesday's fresh six-month lows beneath $1.4860 after new data showed industrial production in the 15-nation currency zone contracted by 0.5% in the year-to-June.

For French, German and Italian gold buyers using the live online market at BullionVault , the Gold Price in Euros reached €547-bid in the Zurich vault, up some 1.3% from yesterday's eight-month low.

"When the Dollar quits going up, Gold quits going down," said Frank Lesh, a trader at FuturePath Trading in Chicago to Bloomberg overnight.

"[But] it's going to take time to repair this. Don't look for a quick turnaround."

After recording the lowest London Fix since Dec. 21st at $808.75 on Tuesday morning, the Gold Price in Dollars stood at $824 per ounce at 10:30am today in London .

In the bond market, 10-year US Treasury yields pushed higher to 3.90%. UK gilt yields, in contrast, fell hard to give back all of Tuesday's sharp rally – sparked by news of a 17-year high in retail price inflation.

That took two-year UK bond yields back to 4.54%, barely above the official rate of consumer price inflation at 4.4% per year.

Tomorrow brings the latest US consumer-price figures, expected to show inflation of 5.2% from July last year.

Current US interest rates now leave cash savers losing more than 3% of their wealth year-on-year.

Even so, "we've seen heavy liquidation in gold driven by a combination of the Dollar strength and oil prices," believes Suki Cooper at Barclays Capital in London

"We're reaching a turning point in prices.

"There have been concerns about the wider economy, circumstances in which you'd expect the Gold Price to thrive in," Cooper told CNBC today. "But we're seeing the opposite...a turn in sentiment, and a rally in the Dollar, the weakness in oil prices, as well as the balance in the equity market."

Outside the holiday-thinned markets of Europe and the US , however, "demand has been so much in the last couple of days" as Suresh Hundia, president of the Bombay Bullion Association in India , told Bloomberg yesterday, "that banks and other importers have run out of supplies.

"If the price keeps falling, there's no reason why people won't continue to buy."

Dealers across the sub-continent report supply problems after the wave of physical buying that started last week.

"The delivery time is four to five days," says one Bangalore trader.

Indian gold buyers accounted for one ounce in every five sold worldwide last year, but this spring's record high prices saw demand collapse by up to 95%.

"Today demand has halted," said one large gold wholesaler to the newswire overnight, "but there are plenty of orders placed in advance for $805-$810 an ounce levels."

On the economic front, India 's annual inflation rate is forecast to have reached a 13-year high above 12% according to a Reuters poll.

GDP growth is cooling, meanwhile, and the value of the Indian Rupee falling fast on the world's currency markets.

Regardless of domestic inflation and imported price hikes, however, O.P.Bhatt – head of India 's largest lender, the State Bank of India – believes interest rates have "almost peaked".

India 's key interest rate remains 3% below the rate of consumer-price inflation, very nearly matching the negative real interest rates now suffered by US cash savers.

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