Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Dow 30k before End of 2020? - 13th Jul 20
Credit Market Investments Turned Into End-User Risk Again - 13th Jul 20
Investors Are Going All-In on This Coronavirus Proof Industry - 13th Jul 20
5 Vital Insights That You Can Gain From Instagram Trackers - 13th Jul 20
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Gold Steady as Fed Delays Quantitative Easing Exit Plan as Debt Monetization Risks Inflation

Commodities / Gold & Silver 2009 Jul 21, 2009 - 07:09 PM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD ticked back above $950 an ounce Tuesday lunchtime in London as US stock futures pointed higher for the 7th session running.

Government bond prices slipped. Crude oil ticked higher above $64 per barrel.

European stock markets added more than 1% on average.

"Oil, stocks and currencies are all favorable for gold," said Ronald Leung of Hong Kong's Lee Cheong Gold Dealers to Reuters this morning.

"The economy seems to be stabilising, making people think about inflation."

Today the US Fed chairman, Ben Bernanke, is widely expected to address the issue of reversing the central bank's historic $1 trillion cash injection and money-creation when he begins two-day testimony before the Senate Banking Committee at 10:00 EST.

Writing today in the Wall Street Journal on "The Fed's Exit Strategy", Dr. Bernanke outlines four options for removing what he calls "excess liquidity", but adds that "Economic conditions are not likely to warrant tighter monetary policy for an extended period" – echoing a speech by Atlanta Fed president Dennis Lockhard on Monday.

"Slack in the economy will suppress inflation. And inflation is unlikely to result – by direct causation –
 from the recent growth of the Fed's balance sheet," Lockhart told his audience in Nashville.

Today's Gold Trading would be "cautious" ahead of the Fed chairman's appearance in Washington, Asian and London dealers agreed.

"If debt monetization is not reversed in the longer term," says a note from Swiss refinery and metal-dealing group MKS, "the economy will be threatened by inflationary escalation, which will prove highly supportive for Gold Bullion."

Bernanke's colleague at Princeton University, Lars Svensson of the Swedish Riksbank told Dow Jones Newswires overnight that he's "not concerned about monetary policy getting too expansionary now."

Judged to be highly influential in policy-making worldwide, Svensson last month cut interest rates for Swedish banks using the Riksbanken's deposit facility to minus 0.25%.

"There is nothing strange about Negative Interest Rates. [It means] we can consume, invest and import more," he says – signaling an intention to push down the Swedish Krona's exchange-rate value.

"In order to counter [the deflationary] threat, most central banks have cut rates to the bone," notes forex strategist Steven Barrow at Standard Bank here in London. "To ease further they have had to resort to other policies, like Quantitative Easing.

"One other option is currency weakness," he says. And into the group of central banks "who are not making public their quest for currency weakness, but whose actions suggest this is exactly what they want...we can put the Fed."

Early Tuesday the US Dollar bounced from yesterday's 10-week low on its trade-weighted index, gaining almost 1% against the British Pound as the UK reported a sharp jump in government borrowing.

Rising twice-as-fast last month as in June 2008, public debt outstanding reached a record £799 billion ($1.3 trillion) – the greatest proportion of GDP at 56.6% since official records began in 1974.

The Bank of England's own quantitative easy program has now monetized one-sixth of the UK government bonds issued so far this year.

The Gold Price in Sterling bounced hard on today's news, coming within 50p of yesterday's 5-week high at £579 an ounce.

Eurozone investors looking Buy Gold saw the price hold steady at €668.

Studying the Dollar value, "Gold Price action is bullish having finally taken out our critical 943 resistance," says a technical note from London market-makers Scotia Mocatta.

"The 943 area had held on 9 separate days since breaking lower on June 12. Now that we are above this level, we believe that it will act as strong support on any pull back."

"Gold has run into strong resistance [however] on approaching $960," counters Walter de Wet for Standard Bank's commodities team. Still advising gold-holders to sell into strength, "There is almost no buying in the physical market at levels above $955," he adds. "Gold is losing some momentum."

Meantime in the official sector – where renewal of the 5-year Central Bank Gold Agreement looks increasingly unlikely as the Sept. 26th expiry approaches – the Bank of Italy has been told the finance ministry's proposed "capital gains tax" will be capped at €300 million, according to a draft amendment seen by Reuters.

Part of the Italian government's hastily-drafted "Anti-Crisis Decree", the amendment is designed to deflect the European Central Bank's anger at the plan, said economy minister Giulio Tremonti.

The proposal sought to take as tax 6% of last year's capital appreciation in the Banca D'Italia's gold reserves – the fourth largest in the world.

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.


25 Aug 09, 05:26
Nice Post

punctilious post. due one detail where I quarrel with it. I am emailing you in detail.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules