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
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 - 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
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 Slips as U.S. Dollar and Sterling Rally

Commodities / Gold & Silver 2009 Sep 29, 2009 - 11:43 AM GMT

By: Adrian_Ash


THE PRICE OF GOLD fell again at the start of Hong Kong trade on Tuesday, dropping further to near-3 week lows by lunchtime in London at $986.50 an ounce.

Asian stock markets meantime closed the day higher, but European shares fell as the Euro fell back vs. the Dollar and Yen.

The British Pound jumped higher despite a raft of poor UK data, driving the gold price in Sterling below £620 an ounce – down 1.4% from Monday's five-month high.

"Gold needs to stay above $990 on the close to keep our bullish view alive," says a short-term technical analysis from Scotia Mocatta, the bullion bank.

"A break of $990 opens up $972 and $957, the former breakout lines. Topside resistance is now seen at $1000."

But "gold remains very well supported despite recent Dollar strength," counters Walter de Wet at Standard Bank, pointing to a target for the Euro – which typically moves in the same direction as US gold prices – of $1.50 by year-end.

Standard Bank's currency strategists expect the European single currency to hit $1.55 "if not $1.60" early in 2010.

"Combined with seasonal jewelry demand, our gold view remains one of buying on dips," says de Wet, reporting "some physical buying returning to the market" as prices fell to the mid-$980s."

MKS Finance in Geneva, a division of the Swiss refining group, also reports "Asia-based operators seeing jewelry demand pick up in India as the festive period approaches.

"[But] gold will need to see ongoing good physical and ETF demand in order to resist to pressure" from the rebounding US Dollar.

Early Tuesday the Dollar bounced from a 6-month low vs. the Yen beneath ¥88.50, and rose for the fifth day running against the Euro.

Crude oil fell 1% towards $66 per barrel. Short-dated government bonds also fell in price, pushing yields higher.

"Driven by a combination of investment and speculative purchases, extended by technically driven trades, and the lack of any robust aware of a strong likelihood of [gold] correction early in the fourth quarter" warns a new report from Frederic Lasserre at French banking giant SocGen today, quoted by Bloomberg.

"A certain hesitancy has emerged amongst fast money to buy gold at the moment due to fears of excess long positioning in Comex gold futures," says Swiss bank UBS's London analyst John Reade.

"We continue to expect a deeper correction in gold and silver in coming weeks."

Looking back at the last 10 years of market-beating gold returns, "Investors who dared place some of their eggs in gold in recent years have been nicely rewarded for what they did," says National Bank of Canada economist Matthieu Arseneau.

"However, the time has come now to revise their positions [because] risk aversion is gradually returning to pre-crisis levels and inflation fears should abate."

Looking at the past three decades, "In times of economic recovery, the return on gold falls well short of the return on the stock market," Arseneau says.

His time-frame includes both the "long boom" of 1982-2000 – when US stock prices rose 13-fold but gold fell by two-thirds – as well as the record equity bull of 2002-2007, when US stocks doubled over 60 months and the gold price gained more than 170%.

Over on the data front Tuesday – and ahead of US housing-price and Consumer Confidence data – Japan reported its sharpest ever year-on-year drop in retail prices, down 2.4% in August from Aug. '08.

Spain reported consumer price deflation of 1.0% year-on-year for this month.

Adjusted for inflation, Spain's retail sales fell 4.0% in August – the sixteenth consecutive month of falling sales.

Here in the UK, the early CBI Distributive Trends survey pointed to a rebound in consumer spending.

But the data came against a worse-than-expected fall in GDP, a decline in consumer credit, a sharp drop in money-supply growth, and a fresh surge in the UK's balance of trade deficit to a two-year record of £11.4 billion ($18bn) between April and July.

Today the Bank of England met with leading commercial economists from the City to discuss its program of quantitative easing and the commercial banks' failure to pass the £150 billion spent so far ($225bn) onto consumers and business as loans.

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