Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Flows to China Rise Sharply Ahead of New Year as Savers Reject Negative Bank Interest Rates

Commodities / Gold and Silver 2010 Dec 22, 2010 - 09:07 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleWHOLESALE PRICES for gold moved sideways around $1390 per ounce in London on Wednesday morning, little changed as world stock markets also held flat but crude oil crept above $90 per barrel.

Silver bullion traded inside this week's tight range below $29.50 per ounce.


A senior bullion logistics executive in Switzerland yesterday told BullionVault that shipments of gold to China are running much higher – and have begun much earlier – to meet consumer demand for the Chinese New Year, which will start on 3rd Feb. 2011.

"Policy makers should allow more flexibility of the Yuan to help ease imported inflation," the People's Daily today quotes politburo researcher Ba Shusong, who forecasts a possible 6% rise in consumer prices year-on-year in 2011, but says that raising interest rates to combat inflation would only invite capital inflows from overseas.

"Reserve requirements for lenders and central bank bill sales may be better tools for controlling inflation than interest rates," says Ba.

Cash deposits – which currently account for the lion's share of China's massive household savings – now pay 2.25% per year, only half the latest rate of inflation. Consumers are increasingly choosing to spend immediately or invest their money outside deposit accounts according to a new survey conducted by central bank the People's Bank of China.

Less than 38% of the 20,000 households surveyed across 50 cities said they are now willing to deposit money in banks, down from well over 43% three months before.

Meantime in Washington today, the International Monetary Fund said it has completed the gold bullion sales program begun in Oct. 2009.

Some 57% of the 403-tonne total was bought directly by central banks, led by India.

"Outside of the IMF sales, little other [central-bank] selling has materialized," notes Barclays Capital's Suki Cooper in an email, pointing to the near-zero gold bullion sales from Europe's major central banks since the global financial crisis began in 2007.

"Gold's price reaction was muted in response to the news [today], but in the absence of the IMF sales, the [official] sector is set to swing into a net buyer of gold," says Cooper.

"What the sale does represent is a sea change in gold demand if current patterns continue," says Lawrence Williams at MineWeb.

"A number of central banks have been quietly, or overtly, increasing their gold holdings, in part [because of] the huge increases in money supply generated by Quantitative Easing programmes" in the West.

"The liquidity pumped out by central banks means that there is a lot of money sloshing around that needs to find a home," says Citigroup analyst David Thurtell, quoted by the UK's Independent and pointing to gold investment as a clear beneficiary.

"Interest rates remain very, very low and are probably not likely to rise for some time...So the opportunity cost of investing in gold is very low."

The US Federal Reserve will start raising its key lending rate in mid-2011 according to the interest-rate futures market, says a recent paper from the Atlanta Fed.

But "If you apply any kind of simple Taylor rule [regarding the apparent trade-off between interest rates and employment] to even the optimistic forecasts I'm seeing," says Nobel-winning economist (and former colleague of Ben Bernanke's at Princeton University) Paul Krugman, writing in his New York Times blog, "it implies zero rates through to the end of 2012 and beyond."

"In our view, QE2 – the Fed's second quantitative easing move – is only the beginning and the fear of future inflation will continue to drive gold investment demand higher and for longer," says a note from US financial planners and brokerage Raymond James Ltd, quoted by the Globe & Mail.

RBC Dominion Securities, also in Toronto, sees gold prices perhaps hitting US$1500 early in 2011, and averaging $1400 until end-2012.

Chart-watching technical analysts at Barclays Capital in London believe the next short-term gold price peak could be $1480 an ounce, says Bloomberg News.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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

6 Critical Money Making Rules