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
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Hit by Strong U.S. Dollar

Commodities / Gold & Silver 2009 Sep 28, 2009 - 09:08 AM GMT

By: Adrian_Ash

Commodities

The PRICE OF GOLD bounced from its lowest level against the US Dollar in 13 sessions early on Monday, recovering last week's close at $992 an ounce by lunchtime in London and rising sharply against Euros and Sterling.


European equities held flat but Asian shares finished the day sharply lower. The US Dollar jumped again on the forex market, outpaced only by the Japanese Yen, which reached an 8-month high on rumors the new Tokyo government may let the currency rise unhindered.

Government bonds ticked lower. Crude oil slipped below $66 per barrel – more than 8% below last week's start.

"Positioning in the precious-metals [futures] markets remains very extended," says USB analyst John Reade in London.

"If the Dollar remains strong, and/or broader asset markets stay under pressure, then Gold and silver could trade much lower in the coming weeks."

Another UBS strategist, quoted in the latest Economist magazine, notes of all financial markets that "Liquidity has been a much bigger driver than fundamentals. Liquidity-driven rallies have a habit of reversing violently without warning."

Latest data from US regulator the Commodity Futures Trading Commission (CFTC) showed after Friday's close that the outstanding volume of open Gold Futures contracts rose again last week, adding 1% to a new 12-month high.

Hedge funds and other speculative players betting with borrowed money raised their "net long" position (of bullish bets minus bearish bets) to a new all-time record equal to 795 tonnes via the Gold Futures and options market.

The trust-fund traded as SDPR Gold on the New York stock market grew the volume of bullion held to back its shares by 0.7% to 1,094 tonnes.

London's major Gold ETF provider, ETF Securities Ltd, said it's increased its bullion holdings to a record 261 tonnes.

"Gold's recent weakness has attracted some fund buying interest," says Walter de Wet at South Africa's Standard Bank this morning."

"Increased investment fund flows may see Gold continue to garner support should prices weaken further. Resistance is at $996."

Overnight, and following US President Obama's accusation that Iran has built a second nuclear installation in contravention of international law, Tehran's Revolutionary Guard announced the successful test of long-range missiles which analysts believe could reach Israel and US bases in the Gulf.

The Gold market, however, "is paying very little attention to geopolitical issues at the moment," notes one London dealer, citing instead the US Dollar's fourth daily gain in succession.

"Could it be a case of déjà vu all over again?" asks Steven Barrow at Standard Bank in London, pointing to summer '08 – when a sharp drop in oil prices was followed by a surge in the US Dollar's exchange-rate value.

As a result, the Gold Price in most major currencies hit new record highs last October, even as gold priced in the US Dollar dropped one-third from its peak of $1,032 an ounce.

"The market might fret about weaker global growth or the crackdown on speculative positioning in the commodity market," says Barrow. "But unless these same fears lead to a liquidity squeeze, which we doubt, any oil price weakness should not drag down Euro/Dollar, nor give the Dollar a lift on a global basis."

Today the European single currency bounced from a sharp sell-off to two-week low vs. the Dollar at $1.4570, but the Gold Price in Euros still rose, briefly recovering more than half of last week's 1.5% drop.

The Gold Price in British Pounds – rising for seven of the last eight weeks – spiked to a new five-month high above £629 an ounce as Sterling sank yet again on the forex market.

On the monetary policy front, meantime, leaders of the G20 industrialized nations moved from their meeting in Pittsburgh to Istanbul, Turkey, for the annual meetings of both the International Monetary Fund and the World Bank.

Last week's G20 summit ended with a pledge to cap bankers' pay, impose new regulatory reforms, and develop a "framework" for balanced global growth.

"We've brought the global economy back from the brink," claimed US president Barack Obama.

Restating their commitment to a joint package of $1.1 trillion – first announced in London this April – the G20 nations have so far injected stimulus equal to 2.0% of their aggregate GDP for 2009, planning stimulus of 1.6% for 2010.

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

© 2005-2019 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