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
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Gold Bounces as Protectionism and Money Printing Spreads

Commodities / Gold & Silver 2009 Feb 02, 2009 - 07:02 AM GMT

By: Adrian_Ash

Commodities Best Financial Markets Analysis ArticleTHE WHOLESALE PRICE of gold bullion sank 2.3% in early London trade on Monday, bouncing off $905 an ounce as world stock markets also tumbled.

German and French equities dropped more than 2% by lunchtime after losing one-tenth of their value in January.


With much of the City's senior management kept at home by the worst snow-fall in 18 years – and with wild-cat strikes hitting UK energy facilities over the hiring of foreign workers – London's FTSE100 index slid 1.6%, dragged lower by banking shares.

"Reasonable estimates of the shortfall in private [US] demand are on the order of three times the $800 billion stimulus package," writes 2008 Nobel prize-winner Paul Krugman in his blog for the New York Times .

"There is a short-run case for [economic] protectionism – and that case will increase in force if we don't have an effective economic recovery program."

President Obama denied at the weekend that establishing a "Bad Bank" to take toxic assets off private financial balance-sheets could cost US tax-payers $4 trillion.

Today the Chinese premier Wen Jiabao told the Financial Times that "We may take further new, timely and decisive measures before an economic retreat" after new data showed 20 million rural migrants losing their jobs and returning home from China's once-booming cities.

Beijing is already running a stimulus package worth $586 billion, announced in November.

"Such rescue efforts so far have failed to stem financial sector problems," notes Christine Li, an analyst at Moody's – the credit ratings agency – here in London.

"Investors have continued to shift their money to safe havens such as government bonds and Gold ."

Nick Moore, chief commodities strategist at RBS – the No.1 UK bank, now 70% owned by the state – agrees.

"We view markets as increasingly concerned about the implications of aggressive monetary pump-priming that is going on in the US and elsewhere.

"In these treacherous markets, making money is not necessarily the prime objective. Stemming losses and capital preservation are also at play and gold should satisfy these objectives."

Back in Monday's action, US crude oil futures fell to $40.50 per barrel while government bonds rose across the board and what one trader last week called the " New Risk Dynamic " in foreign exchange markets continued – albeit in reverse.

January 2009 saw the sharpest-ever divergence between the movement in Gold and in Europe's main currency vs. the Dollar.

Today the Euro rose against the US Dollar and Japanese Yen, even as the Gold Price fell. The single currency also bounced two-pence against the British Pound after losing 7% of its Sterling value in five sessions.

The Gold Price in Euros fell sharply from new all-time highs above €628 an ounce. But at the Asian opening, gold recorded new all-time highs against the Australian and Canadian Dollars, as well as the Swiss Franc.

"According to our traders, today's [gold] selling emanated from Chinese traders," says John Reade, analyst at Swiss giant UBS, in a note to clients.

Returning from China's long Lunar New Year celebrations, "We suspect they saw Euro-Dollar lower, gold much higher and sold short-term gold positions they owned," reckons Reade.

"The sharp move lower triggered stops on the electronic futures market. [However] we expect safe haven buying to support gold and hold our one-month forecast at $900."

" Gold broke the $916 resistance on Friday evening and surged higher," adds today's technical note from Mitsui here in London, "getting right to our target of $930 where it paused and then closed a few dollars lower.

Looking ahead for Gold in 2009 , says Mitsui, "$930 was the October high and a break of this level would project us back to four-figure gold."

The precious metals dealer now pegs support at $900 an ounce, adding that " ETF investors are still convinced of the longevity of this market."

Last week saw the gold held at various London bank facilities on behalf of New York's SPDR gold trust swell by 11 tonnes.

Daily trading volume in the world's largest Gold ETF reached a 3-month peak, as did the Dollar-gold price – on what wholesale dealers and brokers confirmed as strong demand from investment institutions.

Twenty-two out of 31 traders and analysts interviewed worldwide by Bloomberg News at the end of last week forecast a higher Gold Price by this Friday.

Eight advised selling, the newswire says. One was neutral.

Over on the US Gold Futures and options market, latest figures show hedge funds and other "Large Speculators" growing the net long position to a five-month high in the week to last Tuesday, up almost three times over from the 41-month low of mid-November.

That coincided with gold falling to $680 an ounce, then a one-year low. The Gold Price has since risen by more than one-third.

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 2009

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