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
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Near 2010 Highs, Safe Haven Premium Supported by Credit Risks & Rising Liquidity

Commodities / Gold and Silver 2010 Apr 30, 2010 - 08:59 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose to a near 5-month high in Dollars in London on Friday, adding 1.4% from last week's finish as the long May Bank Holiday weekend drew near.

A rally in Asian stock markets faded in Europe, but the Euro jumping back above $1.33 on rumors of a weekend deal for an Athens bail-out.

Gold priced in Euros traded towards a record weekly finish around €28,400 per kilo, some 1.3% below Wednesday's intra-day peak.

US investors wanting to buy gold today saw it move towards the second-best weekly finish ever, rising above $1175 an ounce.

Silver prices jumped within 20¢ of their 2010 highs, rising 2.0% from last Friday's close to $18.74 an ounce.

"Events in Europe have refocused investors' attention on the value of gold as a hedge versus currency debasement," notes the Natixis bank research team led by Patrick Artus in Paris, "with the gold price denominated in Euros rising to new highs this week as the Greek debt crisis intensified."

But noting the recent interest-rate hikes by China, India and Brazil, however, "If the negative cost of carry on leveraged gold positions was to rise, so the gold market contango would be expected to steepen," says Artus, "to the detriment of spot prices."

On the contrary, says Walter de Wet at Standard Bank in London, gold is enjoying "a safe haven premium."

"Unlike crude oil," de Wet writes, "gold has been consistently trading at higher levels for the same Euro/Dollar exchange rate since 2007." This means "there are other factors inflating the gold price" besides the US currency, in which both oil and gold are usually priced for convenience.

"These factors, we believe, are predominantly credit liquidity and ease of storage. We expect credit risk to remain elevated for most of 2010. We also expect liquidity to continue to grow this year.

"Therefore we expect support for gold to remain largely in place."

Crude oil today rose above $86 per barrel, some 40% below its all-time top of July 2008.

New data released in Tokyo meantime showed Japanese consumer prices falling further in March, the 13th consecutive month of deflation.

Spanish unemployment rose above 20% for the first time in more than 10 years.

US economic growth for Jan. to March was pegged by the BEA at 3.2% annualized, recovering one-third of 2009's full-year drop in Dollar terms.

Disposable personal incomes were flat. Personal consumption rose 3.6%.

Swiss shareholders meeting in Zurich blocked Credit Suisse's proposed pay and bonus packages. European regulators said they are bringing "high-frequency trading" by investment banks into their review of the Market Abuse Directive.

The US Justice Department said it's begun a criminal investigation into Goldman Sachs' mortgage-bond derivatives deals.

"You have a lot of investors who are still very bullish on gold but they're a little hesitant to buy at what really are elevated prices," says Jeffrey Christian, head of New York's CPM Group consultancy, speaking on Thursday to South Africa's MineWeb.

"On the other side of the table you have a lot of investors who had been driven by shorter-term economic factors – recession, a credit freeze, the stock market...

"Now we're coming out of that...there is reduced need for gold as an asset, as a portfolio hedge in the minds of those people who have been investing on a shorter-term basis."

Greek politicians on Thursday agreed new "austerity" measures to try and cut the government's budget deficit by 10 percentage points of GDP by end-2011.

"There isn't much room for maneuver. This is about saving the country from collapse," the FT quotes Andreas Loverdos, Athens' social affairs minister.

So far, of the 3-year package of aid now set at €120 billion, Cyprus has approved €60m, Belgium has drafted a law to lend €1bn, and German politicians are set to discuss an $8.4bn contribution next week.

There is no word as yet from France, Italy or Spain on their commitment to the proposed bail-out.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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 2010

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.

© 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