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 Follows U.S. Dollar Higher as Stocks and Crude Oil Fall 

Commodities / Gold & Silver 2009 Apr 07, 2009 - 05:20 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD bounced overnight Tuesday in Asia, regaining two-thirds of yesterday's sharp losses against everything except the US Dollar, which rallied hard from one-month lows on the currency market.

World equities added to yesterday's losses on Wall Street, dropping back below 4,000 on the FTSE100 here in London.


US government bond prices rose, pushing yields lower, while the Treasury prepared this week's auction of $59 billion in new debt.

Crude oil slipped for the third session running, falling towards $50 per barrel.

"India has been a notable gold buyer in recent days," reports Mitsui here in London today after the Gold Price lost 6% of its Rupee price in 3 trading days.

"However, based on our conversations with local dealers," Mitsui goes on, "it's likely that gold will need a dip towards the $850 level before the market experiences the true force of this buying interest."

Faced with new all-time record high prices above Rupees 15,000 per 10 grams, the world's No.1 consumer nation imported only 1.8 tonnes between Jan. and March.

That was 97% below last year's levels.

"Buying interest from India has started to emerge," confirmed a physical Gold Bullion dealer in Singapore to Reuters this morning, "although the amount is not huge."

"We have placed a lot of orders from Thursday onwards," said a private-bank dealer to LiveMint, the Wall Street Journal's Indian website.

"If gold remains below 14,500 Rupees per 10 grams, demand will continue to be there."

Over in Switzerland, a major refiner of metal for the Indian market, "I think with the [Akshaya Thritiya] festivities approaching and the Gold Price coming off, there may be some demand in the near future," said Afshin Nabavi at MKS Finance in Geneva earlier.

After what may have been an accounting-led sale on Friday, the huge SPDR Trust listed in New York maintained the volume of bullion it holds to back Gold ETF shares above 1,127 tonnes yesterday – more than 75% greater than this time last year.

Shareholders lose 0.4% per year in fees, charged by reducing the gold-backing for each share, now down to 9.827% of an ounce but still trading as equivalent to fully one-tenth.

"In the bigger picture, we are holding onto our view of a move to $1,200 an ounce, though this is now likely a story for the second half of 2009," reckons Jordan Kotick, chief chart-watching technical analyst in New York for Barclays Capital.

"We are disappointed by the move below $882, as this has alleviated the bullish potential," he told clients in a note Monday.

"While capped by $900, the risk is for further weakness to a swing target near $845, or even a measured move at $805."

On a fundamental basis, meantime, analysts continue to argue about the likelihood – and likely impact – of IMF Gold Sales on the free-market price.

Citing a "limited impact" after the G20 summit last week in London failed to double the previous proposal for 403-tonne sales by the International Monetary Fund (IMF), Goldman Sachs still forecasts an 11% drop in Gold Prices "over the two to three years of a proposed sale."

But whilst the IMF has approved the sale, "the member countries haven't," notes Mitsui.

"With the main voting right sitting with the US, this will probably take over 6 months to get approval (if any) from Congress.

"Our view hasn't changed & the current price falls should be seen as buying opportunities given the impact of global spending programs on long term inflation."

Rumors in the UK press today say that the IMF may raise its estimate of global bank losses as a result of the credit crunch to hit $4 trillion.

Last Friday, just after the G20 summit confirmed $5 trillion in monetary and fiscal stimulus, plus another $1.1 trillion of new IMF cash, Japan announced a further $100bn stimulus for its domestic economy.

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

© 2005-2022 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