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
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Slides as Oil & Bonds Fall, Stocks Rally Ahead of Bush's 'Hope Now' Rescue for US Subprime Market

Commodities / Gold & Silver Dec 06, 2007 - 09:21 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES continued to slide early Thursday, falling more than 1% from Wednesday's New York close to trade at $786 per ounce by the time the Bank of England made the first cut to Pound Sterling interest rates in two years at midday in London .


That move – driven by "deteriorated" financial markets and "a tightening in the supply of credit," according to the BoE's statement – drove the Pound to an 11-week low beneath $2.0200 and helped the Gold Price in Sterling to bounce off £388 per ounce.

Crude oil prices also fell, meantime, dropping for the third session running to hit a six-week low more than 13% below their all-time top of mid-Nov.

Asian stock markets ended the day 1.6% higher. European shares rose 0.5% by lunchtime.

"The US Dollar is certain to remain the main price determinant on a short-term perspective" for Gold Investment , said analysts at Commerzbank in a research note this morning.

"We expect new positive momentum on the Gold Market again after the expected interest rate cut on 11 December at the latest."

European government bond prices ticked lower, meantime, ahead of today's interest-rate decision from the ECB in Frankfurt . But with economists split over the central bank's decision (due at 07:45 EST ), the Euro also slid to a one-month low of $1.4525, helping Gold Priced in Euros hold above Monday's low at €540 per ounce.

US Treasuries also fell early today, pushing yields higher as investors awaited full details of the Bush Administration's Hope Now plan to rescue subprime home-buyers.

"This backup in yields is attributable to more details on the Bush Hope Now plan," said Adam MacKillop, a bond-trader for Barclays Capital in Tokyo .

It's a knee-jerk reaction for equities. There's hope, and that's negative for Treasuries generally."

Broad-based commodity indices slid alongside bond prices early this morning, with "falling crude oil prices putting pressure on soybeans and corn" for biofuel production, according to a Japanese trader interviewed by Bloomberg.

"The Dollar's recent strength may also discourage buying interest in commodities," he added.

Zinc futures traded in Shanghai also fell, and copper wiped out an early 1.1% gain to stand 0.4% lower for the session after the People's Bank of China said it will shift from a "prudent" to "tight" monetary stance in 2008 – potentially denting demand for construction materials.

But raising Chinese interest rates six times in 2007 failed to stop the economy growing by 11% annualized. Inflation in the cost of living ran at 4.4% annually in October. New lending by private banks has risen by more than 15% so far this year.

"We believe the language of 'tight monetary policy' used at this conference is merely a retroactive endorsement of what has already been implemented," reckons Jun Ma, chief China economist for Deutsche Bank.

"It simply means that official policy statements sometimes are backward looking...and serve more of a function of political hedge than initiating further policy changes."

China 's booming economy has led to a surge in Gold Buying by private consumers and investors, the GFMS consultancy said yesterday. Demand for gold jewelry is set to rise by one-fifth for 2007 as a whole – and " China is poised to become the world's second largest jewelry market for gold this year," says Philip Klapwijk, executive chairman of GFMS, "overtaking the United States and coming in No.2 behind India ."

"I would expect it to grow further in 2008."

Disposable household income in urban China rose 13.2% between Jan. and Sept., led by the stock market and property boom.

"More economic development in China and a relatively higher savings ratio than that of India should in the long-term drive gold demand in China ," reckons Stephan Schlatter, head of metals in Asia for UBS.

China 's domestic gold-mining production also rose strongly during the first nine months of this year, according to analysis by Surbiton Associates in Melbourne , Australia , released this week.

Reaching 191.5 tonnes of gold bullion, China 's output overtook the United States and was only just behind South Africa , the world No.1, where annual gold-mining production has now halved in the last decade.

Yesterday brought news that DRD Gold – South Africa 's fourth-largest producer – will suffer a 15% drop in gold output this quarter following an accident. Tuesday saw a one-day strike by almost 250,000 miners in South Africa in protest against what the National Union of Mineworkers calls "mining genocide".

Mining-related deaths now total 201 for this year so far, worse than 2006 and on track to equal 2005. Fatalities in South Africa 's mining sector have fallen by 56% as gold output has halved since 1996, but the industry was hoping to cut that number by a further 20% by 2013.

China is also suffering a wave of mining-related accidents, however, with up to 96 coal miners feared dead this morning after an explosion in the northern province of Shanxi .

The surge in Chinese gold production could also reverse sharply by 2013 according to a leading industry figure today.

"It's urgent for Chinese companies to develop gold mines overseas," said Ren Guangzhi, investment manager at Zijin Mining Group, owner of China 's biggest gold mine, in Shanghai .

Unless new deposits are found and developed soon, he believes China 's reserves – including gold-only mines producing 200 tonnes per year – could run out within six years.

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2007

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 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