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
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
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

Stocks Jump on G20 Plan as Gold Slips Lower

Commodities / Gold & Silver 2009 Mar 16, 2009 - 08:31 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD slipped 1% early Monday in London, falling alongside the US Dollar as world stock markets jumped. By lunchtime in London, the FTSE100 index stood back at this month's opening level – and more than 9% above the six-year low hit on March 5th – after the weekend's G20 meeting of leading policy-makers agreed a rough plan for buying up "impaired assets" from international finance houses.

The AM Gold Fix , meantime, priced gold at $923 an ounce, almost 3% lower for March so far.

Eurozone investors now Ready to Buy  Gold saw the price slip once again, drifting 6% below the level of two weeks ago to €708 an ounce.

The single currency meantime broke above $1.30 for the first time this month.

"Sentiment towards gold is much more positive than a week ago," writes Walter de Wet in his precious metals note for Standard Bank. "Gold has been benefiting from reduced scrap inflows and increased ETF holdings."

Short-term, "We believe that ETF buying momentum isn't enough for gold to break above $950," de Wet goes on, but action in the derivatives market says otherwise.

"Call options [to buy] on the April Gold Futures contract, with a strike at $950, have risen quite sharply over the past two days, while put option volumes with a strike of $900 have declined substantially."

Latest data from US regulator the Commodity Futures Trading Commission (CFTC) also point to industry insiders growing their bullish position to a four-month high last week.

As a proportion of all Comex Gold Futures and options held by the so-called "smart money" of refineries, mints and bullion wholesalers, bets on a rising Gold Price rose to 32%.

Hedge funds and other speculators cut their bullish ratio to 87%, meantime, the lowest proportion since Gold Prices began recording higher highs and higher lows for the first time in nine months in mid-Dec. 2008.

"Gold's path from here is a little unclear after violent movements around $930 on Friday left us with a $20 range," says London gold-dealer Mitsui in its note to clients today.

"We are gravitating back to the middle of that range today as the market awaits some external direction."

On the data front this morning, UK house-price deflation hit 9.0% year-on-year on the latest Rightmove index of asking prices.

Tokyo apartment sales sank once again in Feb., said the Japan Real Estate Institute, while New York State's manufacturing activity showed a fresh record low according to new US data.

Consumer prices in the 16-nation Eurozone meantime rose at a 4.9% annualized rate between Jan. and Feb.

Current Eurozone interest rates stand at 1.5%.

Now holding interest rates below 0.1% and 0.25% respectively, both the Bank of Japan and US Federal Reserve will announce their policies for the coming month on Wednesday.

"We'll see the recession coming to an end probably this year," claimed US Fed chairman Ben Bernanke on CBS's 60 Minutes yesterday. "We'll see recovery beginning next year."

Setting out a wish-list for "bad bank" best practice, the G20 group of nations – which represents some 90% of the world economy, and with two-thirds of its population – agreed this weekend to buy toxic assets "at a fair price...with appropriate risk sharing, to limit the cost to the government as well as prevent moral hazard."

But while "government support should be temporary and should include well-defined exit strategies," the group of 19 leading economies – plus the current European Union president, the Czech Republic – also vowed at its meeting in Horsham, England that "G20 central banks will maintain expansionary policies as long as needed, using the full range of monetary policy instruments, including unconventional policy instruments."

Last week the Bank of England began "quantitative easing", pumping a total of £75 billion into the financial sector in a bid to revive inflation in asset and consumer prices.

Set for $3 trillion of fresh issuance worldwide this year, government bond prices fell hard early Monday – driving the yield offered by 30-year US Treasuries up 13 basis points to 3.81% – while the price of oil sank 3.5%, dropping to $44 per barrel.

Also meeting this weekend, the Opec oil cartel chose not to cut output quotas in a bid to support energy prices, disappointing bulls who bought late last week on expectations of tight supply.

By Adrian Ash

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 , 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

© 2005-2022 - 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