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
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Trades Cautiously Whilst Physical Demand Outstrips Supply

Commodities / Gold & Silver Nov 26, 2008 - 11:44 AM GMT

By: Adrian_Ash

Commodities SPOT PRICES FOR WHOLESALE GOLD held steady in Asian and early London trade on Wednesday, moving between $811 and $815 an ounce as world stock markets gave back one-fifth of this week's rally to date.


" Gold bounced wildly [on Tuesday] to end the day almost unchanged," says Walter de Wet at Standard Bank in his note from Johannesburg. Indeed, all markets "were directionless," he adds, despite the Federal Reserve promising a further $800 billion to spur domestic US lending.

"This could be because US markets are winding down for a long weekend (tomorrow is the US Thanksgiving holiday). It could also be that uncertainty has been increasing this week, and no investor wants big exposure, especially with volumes low.

"We foresee cautious markets until at least Monday next week."

Meantime in the forex market, "something is changing," notes De Wet's colleague on the currency desk, Steven Barrow.

"When markets turn more risk averse [and stocks fall in price], the Japanese Yen performs very strongly across the board. But when risk returns the Yen hardly weakens.

"This suggests there is a strong underlying demand for the Yen that should ensure not just 80 against the Dollar in time but also 100 against the Euro."

Today the Japanese Yen held near ¥95 per Dollar and pushed the Euro down 3.4% from Tuesday's early high at ¥126 as the Nikkei stock index lost 1.3% – down by one-tenth for the month so far.

Tokyo Gold Futures – benchmarked for delivery in Oct. 2009 – ended the session unchanged at ¥2,467 per gram, 14% higher from the end of Oct. but down by one-quarter from July's 25-year high.

The Shanghai stock market eked out a 0.5% gain after the People's Bank of China delivered its sharpest cut to interest rates since the Asian Crisis of 1997.

Slashing more than 1% off the cost of borrowing, the move "reflects Beijing's concerns about the rising risk of a growth slump and deflation," reckons Qu Hongbin, chief economist at HSBC in Hong Kong.

He forecasts a further 2.5% cut to the cost of borrowing, down to 3.4% or below, by May 2009.

"The escalating financial crisis that began in August 2007 has pushed the global economy into recession," says a research note from the Global Insight consultancy today. It pitches global recession as annualized growth, after inflation, below 2.0% per year.

"The world's real GDP growth is projected to slow from 3.9% in 2007 to 2.7% this year and 1.0% in 2009," Global Insight predicts, "the worst performance since 1982."

Today the Euro slipped back from a three-week high of $1.3050 to the Dollar, while the British Pound – now faced with the greatest public debt issuance in UK history – retreated 1.1% from a fortnightly high of $1.5500, hit in Asian trade.

The Gold Price in Sterling held £15 below Monday's near-record high of £550 an ounce.

Crude oil meantime ticked back above $51 per barrel, while government bond prices rose sharply once more, pushing the yield offered by 10-year US Treasuries down 9 basis points to a record low of 3.02%.

The latest US inflation data – released yesterday with news of a 0.5% contraction in economic output – said prices rose 4.7% year-on-year during the July-to-Oct. period.

"Year-end is coming, so the [gold] jewelry and industrial sectors are trying to reduce inventories," said Dick Poon, head of precious metals in Hong Kong for Heraeus, the giant German refining group, to Reuters this morning.

"They don't want to buy for the time being. They still want to keep more cash."

The Gold Coin Shortage hitting buyers in the retail investment market continues to wear on, however, with major US dealers no longer able to specify expected waiting times for new orders.

"We have only Maple Leafs and Krugerrands, one ounce only," says a local dealer in Colorado on his website. "2-3 week delay. No other gold items."

Over in Australia, "the Perth Mint is not taking any more orders for gold until January," writes Greg Canavan for the Fat Prophets newsletter.

"Our guess is that the Mint does not want to expose itself to higher future prices, given that it does not have the inventory to meet the demand for bullion."

But with Gold Investment demand from buyers willing to suffer the high costs and hassles of dealing in Gold Coins now surging for more than three months, "the jump in Gold Prices has brought some physical product onto the market," reports Patrick A. Heller, a coin dealer writing at Numismaster.com for Krause Publications.

"You still are typically facing 1-3 weeks delivery on US American Eagles, Canada Maple Leaves, Austrian 100 coronas, Mexican 50 pesos, and the like, but the premiums at which they have been selling above gold spot are now down about 25% in the past few days."

Here in London, however, Gold Dealers are still charging 10% and more above Spot Gold prices for even the most heavily minted coins, such as South African Krugerrands.

For more collectible items – where scarcity adds to numismatic value – "coin dealers are concerned that the overall drop in consumer spending may carry over into the numismatic market," says Patrick Heller.

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