Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Follows Stocks Lower

Commodities / Gold & Silver 2009 Sep 10, 2009 - 08:22 AM GMT

By: Adrian_Ash


THE PRICE OF GOLD fell to a one-week low against the US Dollar on Thursday morning in London, trading at $984 an ounce as European stock markets also fell for the first time in six days.

"After six up days it looks like we finally ran into sellers," says one bullion bank, Scotia Mocatta, in a technical note to clients.

"It will be interesting to see if [Gold] revisits the former resistance line at $975 [but] this is only the first down day, so we do not expect larger selling unless $965 breaks."

Meantime, "Resistance to a sustainable move above $1,000 remains strong," says the South African Standard Bank.

"What makes the resistance even more remarkable is that gold has failed to move higher despite the Dollar falling almost 1% against the Euro yesterday."

On a daily basis, the value of Euros and gold typically move together versus the US Dollar, showing an average correlation since the start of this decade of +0.50. It would stand at +1.0 if they moved precisely together in lock-step each day.

Today the Gold Price in Euros slipped below €680 an ounce for the first time in six sessions.

"The potential for US Dollar weakness is among the most compelling factors supporting the rally," says James Steel, metals analyst at HSBC, in a client note.

"The traditional inverse relationship between gold and the US Dollar appears to have been re-established during the current gold rally,"

Gold's correlation with the Euro, though strong, has in fact slipped lower since last week's sharp jump towards 18-month highs vs. the Dollar, falling to +0.67 from August's daily average of +0.91.

In contrast, the metal's correlation with major stock markets – particularly London's FTSE100 – has risen so far this month, averaging +0.64 from August's +0.16.

Investors are now Buying Gold to defend against potential inflation, reckons Stephen Briggs at RBS, also in London. "Gold's long-term history as a harbinger of inflation, or gauge of inflation expectations, is clear."

But gold's recent sharp rise against all major currencies came as the world's No.1 Gold Mining group, Barrick Mining, bought a huge quantity of metal in the open market to cover forward sales it had already agreed, notes Virtual Metals analyst Matthew Turner, speaking to Dow Jones Newswires.

Between the start of July and Monday this week, Barrick bought nearly 75 tonnes of gold as it finally began closing its "hedge book" after 21 years of selling gold forward in anticipation of lower prices.

Meantime on the monetary policy front today, the Bank of England voted to keep UK interest rates unchanged at their record low of 0.5%. The Old Lady is also pressing ahead with her £175 billion program ($290bn) of Quantitative Easing, through which she has already bought government bonds equal to this year's entire new gilt sales to date.

Over in China – world No.1 for private Gold Buying between Jan. and July, overtaking India with 195 tonnes of physical demand – the nation's largest bank said yesterday it's launching a special precious metals division to help meet this huge and steadily growing market.

"With China's rising affluent population, its gold market has been expanding at a rapid pace, and we believe it still has huge potential to grow," said Industrial & Commercial Bank of China (ICBC).

Analysis from BullionVault shows Chinese households grew new gold purchases from 1.0% in 1998 to 1.8% of their annual savings last year. (Read more about China's Galloping Gold Consumption here...)

"The Chinese continue to have a custom keeping gold as personal wealth," says ICBC.

In the UK and US, in contrast, cash-strapped consumers are selling gold in record numbers and often well below fair market values according to press reports today.

"It is probably the largest phenomenon the industry has seen since 1980 when people were queuing out the door to buy silver," says David Johnson of pawnbrokers Rex Johnson & Sons in the English Midlands, speaking to the Birmingham Post.

"In our Dudley shop they have been queuing out of the door since last February. It has escalated at the shop on Corporation Street [in central Birmingham]. We employed about eight people last February and now we have got about 50."

Complaints against dedicated gold-buying ventures have leapt, however, according to data from the Better Business Bureau, with price discrepancies featuring heavily.

"Not every internet gold buyer is dishonest," says one online jewelry buyer in a press release, citing one customer who was offered $310 for a package of gold items it then bought for $1,800.

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