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
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Rallies on 50-50 Chance US will Lose Triple-A Credit Rating Status

Commodities / Gold and Silver 2011 Jul 15, 2011 - 07:40 AM GMT

By: Ben_Traynor

Commodities Best Financial Markets Analysis ArticleDOLLAR gold prices rose to $1583 per ounce Friday morning London time – having dropped back in Asian trade following all-time highs – while stocks and commodities were flat and US Treasury bonds edged up in spite of warnings the US could lose its AAA status.

Going into the weekend, gold prices looked set to post a 2.5% weekly gain.

Silver prices rose to $38.35 per ounce – 4.5% up for the week.

"More gains seem likely," says Swiss precious metals group MKS, adding that gold prices are "on-course to challenge $1600 as default fears continue to drive investors towards more tangible assets."

"We do see a lot of upside in gold prices given it's already passed the key resistance level of around $1,550," agrees ANZ Bank analyst Natalie Robertson in Melbourne.

Ratings agency Standard & Poor's warned on Thursday that the ongoing failure of US politicians to reach agreement on the debt ceiling means "there is at least a one-in-two likelihood" that it will downgrade US government debt within the next 90 days.

"Further delays in raising the debt ceiling could lead us to conclude that a default is more possible than we previously thought," said a statement from S&P. "If so, we could lower the long-term rating on US government this month."

The US Treasury says it expects to hit the $14.3 trillion borrowing limit 18 days from now, on August 2. Republicans and Democrats have so far failed to agree on deficit reduction measures – without which agreement a vote on raising the debt ceiling is unlikely to pass Congress.

The US government is due to make payments on maturing bonds on August 4.

"This is the time" for politicians to tackle the long term US debt problem, John Chambers, chairman of S&P's sovereign ratings committee, told Reuters Friday.

"If you get a small agreement, that will lead to a downgrade."

Chambers warned last month that the government "doesn't have a grace period" – and that it will be declared in default if it misses a single payment.

S&P's announcement follows that of fellow ratings agency Moody's, which said Wednesday it was placing the US on review for possible downgrade.

"Commentators describe the debt ceiling debate as a political charade," says one gold bullion dealer here in London.

"But gradually the sensation dawns that this might actually go badly wrong."

Also in Washington on Thursday, Federal Reserve chairman Ben Bernanke – who was testifying to the Senate Banking Committee – denied advocating a third round of quantitative easing.

"We're not proposing anything today...we just want to make sure we have the options when they become necessary."

Bernanke told the House of Representatives Financial Services Committee on Wednesday that persistent economic weakness could imply "a need for additional policy support." 

US consumer price inflation for June came in at 3.6% on Friday – the same as the previous month.

Over In Europe on Thursday the International Monetary Fund called for a "greater sense of urgency" on the Greek debt crisis.

"The fiscal situation in Greece threatens market disorder that would affect funding rates for other vulnerable sovereigns and could have severe implications for financial institutions," said an IMF statement.

Eurozone ministers are yet to agree the terms of a second bailout for Greece – which would follow last year's €110 billion rescue package – with Germany keen that private creditors make a contribution.

"Just as on the Titanic, not even first class passengers can save themselves," warned Italy's finance minister Giulio Tremonti on Thursday, calling the Greek situation "a crisis moving through the world like a mutant".

"I would say the Eurozone is not similar to the Titanic," responded Germany's deputy finance minister Jorg Asmussen Friday in a BBC interview – adding there is "no rush" to reach a resolution on Greece since the country is funded until September.

The European Banking Association is due to release the results of stress tests on European banks at 5pm UK time. The stress tests are designed to judge if banks would have sufficient funds to weather various hypothetical crises.

The Financial Times reports that 10 out of the 91 banks tested are expected to fail, with issues arising in five countries including the Eurozone's largest economy Germany. 

However, the stress tests will not consider the potential impact of a Greek sovereign default. 

"We remain bullish towards gold as the debt crisis in Europe looks likely to worsen in the next two months," says Xu Jiashun, analysts China's second largest futures broker Yongan, adding that heightened risk-aversion should send gold prices higher.

By Ben Traynor

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

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

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