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
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold Bull Market to be Boosted by Paralysed Central Banks

Commodities / Gold & Silver Sep 04, 2008 - 10:40 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES gave back half of a 1.6% rally at lunchtime in London on Thursday, trading at $809 per ounce as crude oil prices rose and global stock markets fell once again.

Asian-Pacific equities slid for the fourth day running, while German stocks stood 0.8% lower after the European Central Bank (ECB) kept Eurozone interest rates on hold at 4.25%.


Only the FTSE index of UK shares bucked the trend, adding three-quarters of one per cent after Sterling interest rates were kept on hold for the fifth month running.

The Bank of England – just like the US Federal Reserve – remains caught between a double-digit fall in house prices on one side, but a record surge in food and other basic living costs on the other.

British investors trying to take cover from the resulting Destruction of UK Cash Savings today saw the Gold Price in Sterling touch a three-session high of £457 per ounce.

" Gold traded down to $790 again yesterday," notes Mitsui, the London bullion dealer, "as the stronger US Dollar weighed on the precious metals complex.

"Importantly though, this level held and the market rallied back up to close above $800. Physical buying has once again appeared to have stepped in and offered support."

Yesterday UBS of Switzerland – one of the world's very largest Gold Bullion dealers – confirmed that its vault staff have recently been "as busy as at any time over the past 20 years."

Demand from India – the world's No.1 gold consumer – is "running at 5-10 times the average of 2007 levels," the bank added.

Today analysts from J.P.Morgan forecast a 10% gain in world Gold Prices by Christmas – typical of the Sept. to Dec. period over the last decade – driven by the Indian festival season which culminates on Oct. 23rd with Diwali, the Hindu festival of light.

Gold imports to India jumped by 45% last month, according to the Bombay Bullion Association, reaching a new record of 100 tonnes. ( See the true impact of Indian Gold Demand here... )

" Gold has held up pretty well given the stiff head winds it's been facing in terms of the Dollar's rally," said Daniel Smith at Standard Chartered to Thomson-Reuters today.

"While limited investment demand has pushed prices down, strong physical demand globally is proving supportive."

Over in Frankfurt , Germany meantime, the ECB's interest-rate decision – coming after the Euro plunged 10% vs. the Dollar since mid-July – set up currency traders for the crucial afternoon press conference.

"Investors must pay attention to [ECB chief] Trichet's comments for clues on the trajectory for rates," as Manqoba Madinane notes for Standard Bank in Johannesburg, "especially in light of growing downside risks to Eurozone economic growth.

"Dovish comments could see the greenback rally again – which could mean more downside risks for precious metals," says Madinane.

The correlation of daily moves in the Gold Price with the Euro/Dollar exchange rate reached a near-perfect 0.98 at the end of last month, according to data from Reuters, rising from the 12-month correlation of 0.86.

The third asset bought by Dollar-panicked investors since 2002 – crude oil – now shows a daily correlation of 0.90 with the Euro/Dollar, says Bloomberg.

Today Germany factory orders were shown to have slipped by 1.7% month-on-month in July.

"Easing financial market systemic risk [also] means further downside risk for precious metals," Madinane goes on.

"Note that the spread between the generic US two-year swap and government bond yields has broken below 100 basis points after climbing as high as 121 bps since the start of the US credit market crisis."

This easing in money-market tensions "could crimp safe-haven investment fund flows into precious metals," he believes.

Besides setting interest rates for the 350 million citizens of the 15-nation Eurozone, however, the ECB's executive committee was also set to discuss the end of its emergency "liquidity support" for the region's banks today.

Since the start of the global credit crunch in Aug. '07, less than 3% of all new asset-backed securities issued by European investment banks have been placed with open-market investors, according to The Economist .

The rest – worth some €202 billion (US$293bn) – was accepted by the ECB as collateral against emergency loans of government bonds.

Indeed, "a large number of banks have designed ABS tranches, backed mostly by mortgages, purely for ECB consumption," as The Economist reported in June. Mortgage-backed bonds issued against Spanish property, for example, have relied almost entirely on the ECB's special lending scheme.

Today the bond-rating agency Moody's slashed Spanish debt backed by consumer loans from "stable" to "negative", citing "increased pressure" as the nation's economy grows at the slowest pace since 1993.

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