Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold on the Slide as Indian Demand Passes Peak with Diwali

Commodities / Gold & Silver Oct 21, 2008 - 10:27 AM GMT

By: Adrian_Ash

Commodities WHOLESALE SPOT GOLD PRICES slid again in London on Tuesday morning, dropping 2.9% towards a fresh one-month low at $776.60 per ounce while the US Dollar rose to its best level since March 2007 and the stock market rally faltered in Europe.


Lower Gold Prices are helping the physical market satisfy its appetite," notes Mitsui, the precious metals dealer in London, pointing once more to the Indian festival of Diwali festival that takes place next Tuesday.

Buying Gold during this Hindu "festival of lights" is deemed to be auspicious. The World Gold Council (WGC) marketing group now expects Indian gold imports this quarter to match last autumn's record levels.

"This demand should act as a cushion to the ailing Gold Price ," says Mitsui's gold note today. "Major support lies at $730 an ounce."

As the Dollar-price of gold slipped today, the US currency also gained on the forex market, rising to its best level vs. the Euro in 19 months and stronger by one-fifth from mid-July.

The Gold Price in Euros – which hit new record highs above €685 an ounce 10 days ago – held above €589. For British investors wanting to Buy Gold today, the wholesale "spot" price bounced off £456 per ounce, five per cent down from this time last week.

Crude oil fell back below $74 per barrel, despite a clear threat that the Opec oil cartel will cur production quotas when it meets on Friday.

Base metals also sold off, led by a 3% drop in aluminum futures.

London's FTSE100 equity index reversed an early 1.5% bounce, while the German Dax turned negative to stand more than 17% lower for October so far.

"We believe the normalization of money markets should support precious metal prices as liquidity returns," says Walter de Wet for Standard Bank in Johannesburg, "[but] a strong Dollar would make large price rallies difficult to sustain."

The $3 trillion now promised by major world governments to shore up their domestic banks continued to reduce money-market interest rates on Tuesday.

The gap between 3-month US Treasury yields and London's inter-bank lending rates dropped to 3.15%, down from the record 4.50% hit at the start of last week. Interest rates on so-called "commercial paper" – meaning short-term debt issued by corporations – fell to a four-month low in New York.

Monday saw US businesses start registering to sell their commercial paper straight to the Federal Reserve, borrowing directly from government coffers for the first time since the Great Depression.

The bankrupt state of Iceland is borrowing $6 billion from International Monetary Fund (IMF) – the first such bail-out of a Western nation since Britain's rescue in 1976.

The French government is pumping €10.5 billion ($14bn) into Paris's six largest banks as part of a €360bn package to support and guarantee their debts.

Greece today agreed a €28bn deal proposal to recapitalize its banking sector.

"The high-leverage model of finance is bankrupt," said Stephen Green, chairman of the $167 billion HSBC bank, to a conference in Dubai last night.

Even so, however, the securitization and re-sale of banks loans will have to continue, he believes, because "you cannot bring the whole of the world's capital markets back on to banks' balance sheets."

But while governments and central banks flood the banking sector with new cash, the world's supply of gold – an alternative to official currency since Gold was Cut Free from the Dollar in 1971 – remains ever-more strictly limited.

"The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines on-stream," reports Reuters today.

EuroMoney's Latin Finance notes that the South American equity market, including the mining sector, is now "littered with unfinished mergers & acquisitions."

South African Gold Mining junior Pamodzi Gold will miss this year's production targets  by up to 45%, says Business Report in Johannesburg, after struggling to raise the R400 million ($38.77m) in new debt.

Four junior mining companies have now postponed their listing on the Johannesburg Stock Exchange (JSE) for 12 months or more due to the global credit crisis.

South African Gold Mining production between June and end-August fell 17.5% from the same period in 2007.

Cost-price inflation in the mining sector worldwide meantime ran to a massive 20% annually on some analyst estimates.

"Physical gold demand looks relatively robust," believes Frederic Lasserre, head of global commodities research at Société Générale in Paris, "but sentiment remains very nervous towards gold at present.

"The nature of last week's sell-off suggests that this represents a buying opportunity [in bullion], but the market may not yet see it that way."

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