Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold "Calms" as Stocks, Euro Leap on Brussels' €750bn "Shock & Awe"

Commodities / Gold and Silver 2010 May 10, 2010 - 07:56 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD fell hard from last week's record-high finish on Monday morning, losing 2% vs. the Dollar as commodities and global equities jumped on news of the European Union's new €750 billion "Stabilization Mechanism" plan.

The Euro currency leapt 2.6% during Asian trade, rising back above $1.30 – a level first broken in late 2004 – for the first time in five sessions.


Britain's Pound recovered almost half the last fortnight's drop vs. the Dollar, trading above $1.4950.

The French stock market leapt more than 8% by lunchtime in Paris. Frankfurt's Dax and London's FTSE100 both rose almost 5%.

Crude oil and base metals rose sharply. Silver was little changed.

"The impetus for last week's move [in gold] has calmed for the moment," says metals-conglomerate Mitsui's London dealing team in a note.

"Bigger picture, we could be forming another top around last year's December high," writes Phil Smith for Reuters India Technical, looking at the US Dollar price of gold.

"This could be a large double top and...[US futures' trading] volume has been tailing off, which is consistent with such a pattern."

Priced at €750 billion altogether – and far outweighing analyst expectations – the European Stabilization Mechanism is equivalent to "Shock & Awe, Part II and in 3-D" according to one shocked economist in London.

The EU Commission – funded by taxpayers from the 27 member states – will give €60 billion, while the 16 governments of the Euro currency zone will pledge €440bn.

Washington's International Monetary Fund has vowed to contribute a further €250bn.

Germany chancellor Merkel said the package was essential to defending the Eurozone project, but that all member states must now "put their house in order."

"[The bailout] proves that we will defend the Euro whatever it takes," said EU economic and monetary affairs commissioner Olli Rehn.

Coming as the IMF also approved a €30bn loan to Greece, the news sent major-economy government bonds sharply lower as "safe haven" buyers switched into commodities and stocks.

US investors looking to buy gold saw the price drop to $1185 from Friday's finish at $1209 an ounce.

Gold priced in Euros retreated 5.7% from Friday's all-time record high, bouncing higher from a 3-session low beneath €29,200 per kilo.

"The message has gotten through: the Eurozone will defend its money," claimed French finance minister Christine Lagarde today.

Defending "its money" means the European Central Bank has now reversed last Thursday's refusal to buy government bonds – the apparent cause of last week's collapse in financial assets globally – opting instead "to conduct interventions in the Euro area public and private debt securities markets...to ensure depth and liquidity."

Today's ECB statement says the pan-national central bank will "sterilize [i.e. negate] the impact" of these cash injections in the 16-nation Eurozone economy, but doesn't state how.

The ECB also joins the Bank of Japan and Bank of England in re-opening "temporary liquidity" lines of credit with the US Federal Reserve after the cost of inter-bank loans rose every day for the last two weeks, hitting a 9-month high on Friday after the biggest jump since Jan. 2009.

"With the precious metals delivering some of the greatest returns of any asset class so far in 2010, it is unsurprising to see some degree of profit-taking," says Morgan Stanley's Hussein Allidina in New York today.

Latest data on US gold futures and options – released after Friday's close – show speculative players growing their bet on gold rising further to the equivalent of 949 tonnes in the week-ending Tues 4 May.

The volume of gold bullion held to "back" shares in the SPDR Gold Trust – the world's largest exchange-traded gold fund – rose 2.5% last week to a new record of 1188 tonnes.

The mint in Poland, which was set to join the Eurozone in 2012 but currently has no accession plans, reported a 400% jump in sales of gold bars last week.

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , 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 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