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
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Investors Ending 2008 in Profit

Commodities / Gold & Silver Dec 30, 2008 - 10:10 AM GMT

By: Adrian_Ash

Commodities

THE WHOLESALE PRICE OF PHYSICAL GOLD slipped in London on Tuesday, retreating 2% from yesterday's early 11-week high to trade at $871 an ounce.

World stock markets rose and crude oil fell in thin holiday trade. Bond prices pushed higher again, driving yields still further below inflation.


"By and large, the market is unwilling to trade gold from the short side," notes the latest Gold Futures analysis from Mitsui, the precious metals dealer, in London.

"While scrap selling across traditional hubs placed an obvious ceiling on gold scaling $900, this appears to have dissipated for now."

Indeed, "Gold is set to close the year as one of the very few assets posting a positive 2008 return," Mitsui goes on – "a very significant achievement [that] bodes well for the year ahead."

Looking to Gold in 2009 , "as the current deflation reality eventually abates and inflation looms large over the market," says Mitsui, "in such environments gold theoretically should flourish."

Overnight, however, the US Dollar leapt 4¢ against the European single currency, driving it back to $1.3950 and supporting the Gold Price in Euros above €615 an ounce.

That put gold more than 5% higher for French, German and Italian investors from the close of 2007.

Versus the British Pound, the price of Gold continued to hold north of £600 an ounce, more than 37% above its closing level last year.

London's FTSE100 index, in contrast, has dropped one-third of its capitalization. Interest paid to cash-in-the-bank now trails the rate of inflation by the worst margin since 1980.

"The Israel-Hamas tension [has] continued lending support to gold," said Shuji Sugata at Mitsubishi Corp. Futures & Securities in Tokyo to Bloomberg today.

Preparing the outlook for Gold in 2009 , "we may see some technical selling and year-end book squaring after the recent gain."

Tocom gold futures closed Tuesday – the last day of 2008 trading – some 16% lower from New Year's Day. The first annual loss in almost a decade came as the Japanese Yen leapt on the forex market, delivering its strongest performance since 1989.

Bruised by this same "risk aversion" – a flight to cash that saw domestic Japanese investors begin to unwind $6 trillion-worth of offshore investments – the Nikkei stock index ended the year more than 42% lower, its worst ever 12-month loss.

On the monetary front, meantime, the US government promised $5 billion to buy equity in GMAC, the struggling auto and mortgage finance company, in one of the last desperate acts of the Bush administration.

The White House also vowed late Monday to extend the tax-funded loans to General Motors by a further $1 billion.

"Technical momentum signals are still warning of further upside potential for the Dollar," reports Manqoba Madinane for Standard Bank in Johannesburg.

"This could see the Dollar endure volatile swings if [today's Consumer Confidence & Case-Shiller Home Price] data comes in worse than expected. This might then create a negative feedback loop, causing further drainage of tactical investment flows from precious metals today – further compromising upside potential."

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