Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
UK EU Election Results, Brexit Party Victory, Labour and Tory Bloodbath, UKIP and ChangeUK Die - 27th May 19
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Slips After US Housing Starts Jump Despite Supply Glut

Commodities / Gold & Silver 2009 Mar 17, 2009 - 08:02 AM GMT

By: Adrian_Ash


THE SPOT PRICE of physical gold dropped out of a tight range early Tuesday, slipping 1% as world stock markets also fell, reversing one-fifth of their surge last week.

Twelve months to the day since gold prices hit an all-time Dollar high at $1,025 an ounce – a peak which coincided with the firesale of Bear Stearns to J.P.Morgan – today's AM Gold Fix here in London stood 11% below last March 17th's record at $922.

S&P futures meantime priced the Wall Street stock index to open at 754, down 41% from this time last year.

For UK and Eurozone investors Ready to Buy Gold this morning, the price stood 28.5% and 9% higher against the Pound and Euro respectively.

The London and Frankfurt stock markets, in contrast, traded more than 30% below their levels of 17 March, 2008.

"There's been a good deal of optimism in the stock market in the last week or so," notes Steven Barrow in his G10 currencies note for Standard Bank.

"A key test is whether this can continue even in the face of poor economic data."

Tuesday morning saw the US Census Bureau report a surprise jump in the volume of new housing construction for Feb., up by almost one quarter from January's reading despite the glut of existing supply, flagging sales, and weak home-builder confidence.

The Bureau of Labor Statistics meantime said the price of finished goods leaving US factories rose 4.0% last month (excluding energy and food items) from a year before.

Tomorrow the Federal Reserve is expected to keep its key lending rate at between zero and 0.25% per year.

"A distinct lack of physical market appetite, and the continuing inflow of scrap metal, equal the foundation for a weaker Gold Price ," reckons Mitsui, the London-based gold dealer, in its latest Gold Investment analysis.

"Add into the mix a positive week across equity markets, and gold – in theory – is set to charter quite negative waters. [But] enthusiasm for gold is once again heightened in the global suite of ETF products, and most particularly the SPDR contract."

The world's No.1 Gold ETF , New York's SPDR trust fund swelled the volume of gold "backing" its shares by 1.1% Monday, hitting a new all-time record of 1,069 tonnes.

That's larger by nearly two-thirds from this time last year.

"With the chief driver of the 2009 price direction returning with fervor to the market in recent days," Mitsui goes on, "it is reasonable to foresee gold moving extensively to the upside if (and only if) the ETF players continue their love affair with the yellow metal."

On the other side of the trade, meantime, the Chinese government risks doing "too little, too late," says Frank Gong, chief China economist for J.P.Morgan, quoted by Finance Asia.

"A short-term boost to consumer spending is needed to prevent the spread of deflationary expectations."

Now struggling with post-bubble deflation and recession since the end of 1989, Japan today reported an 84% plunge in new machine-tool orders for Feb.

Across in the oil-rich Middle East, "An overt economic stimulus package is no longer a policy option but a necessity," says, summarizing a new report from Markaz, the Kuwait Financial Centre.

Falling oil prices – plus retrenchment by foreign banks – may see Bahrain and the UAE suffer a true deflation in their money supplies, Markaz believes, threatening a depressionary spiral.

In Switzerland – where mortgage rates now stand at 1.5% per year after the central bank slashed its overnight rate to zero – new industrial orders fell almost 9% from a year earlier at the end of 2008, the official data agency reported this morning.

Here in the UK, where mortgage rates still stand above 4.0% – despite official Base Rate hitting just 0.5% – average home prices showed an 11.5% drop in the year-to-Jan. official data said today.

In the 16-nation Eurozone, however, European Central Bank Executive Board member Juergen Stark said there is not a great deal of room for additional interest-rate reductions, Handelsblatt reported.

"We [only] have a little more room" to cut interest rates, says European Central Bank member Jürgen Stark in an interview with Germany's Handelsblatt newspaper.

"For me personally, the [low] threshold isn't far away from the current level."

Remaining negative for the 19th month running, Germany's ZEW survey of economic sentiment today still showed another improvement in March, rising to minus 3.5 and gaining for the fifth consecutive month from Oct.'s near-record low of minus 63 today.

Monday saw the official EuroStat data agency report annualized consumer-price inflation of almost 5%.

Official ECB interest rates now sit at 1.5%.

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

© 2005-2019 - 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