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
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th 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

"Funding Stresses" as Gold Plummets, European Summit Deal "Shows a Lack of Progress"

Commodities / Gold and Silver 2011 Dec 12, 2011 - 10:31 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleSPOT MARKET gold prices dropped to $1670 an ounce Monday lunchtime in London – 2.3% off last week's closing spot price – while stocks and commodities also fell and US Treasury bonds rose.

Silver prices dropped to $31.12 per ounce – 3.4% down on the end of last week.


Gold prices started the week with a 1.4% drop inside half-an-hour during Monday's Asian trade, with many analysts citing 'technical selling' and a stronger Dollar as contributing to the steep fall. 

One gold bullion dealer in Hong Kong says there were rumors over the weekend of stop losses set just below $1700, all of which were cleared out "within seconds" this morning.

"We expect physical demand to return in some strength on approach of $1650," says Standard Bank commodities strategist Walter de Wet.

"Key support for the metal lies at its 200-day moving average at $1,617. Since early 2009, gold has consistently bounced off its 200-day moving average. Unless funding issues in Europe deteriorate substantially...we expect this support to hold."

"The next couple of days are going to be crucial technically for gold," adds Credit Agricole analyst Robin Bhar. 

"Last week we were up at $1760 and we have now lost $80 fairly quickly, that shows that rallies are difficult to sustain in this sort of environment...[given current] funding stresses and money market stresses and the dash for cash."

"Gold market people say European commercial banks are being driven to lend gold for Dollars at negative interest rates just to raise some extra cash for a few weeks," the FT's John Dizard reports.

"Until the funding difficulties at European banks are resolved," adds HSBC chief commodities analyst James Steel, "it is difficult for us to see any near term halt in gold lending. This may help keep gold prices on the defensive."

A unit of HSBC Holdings Plc meantime has asked a judge to determine the rightful owner five gold bullion and fifteen silver bullion bars it is currently storing, newswire Bloomberg reports.

Jason Fane, formerly a client of brokerage MF Global – which filed for bankruptcy in October – says the bars belong to him.

"We had a letter from HSBC that they were on the loading dock to be shipped to our warehouse contractor when there was some action taken by a third party to stop or delay shipment."

MF Global trustee James Giddens reportedly wrote to HSBC to say the silver and gold bars were MF Global "customer property", and therefore should not be released to Fane.

Other investors have also found themselves adversely affected by the brokerage's bankruptcy, including 'Martial Artist of Trend Forecasting' Gerald Celente, who was using MF Global to buy gold via futures contracts – in contrast to directly buying allocated gold.

In its final days, MF Global is alleged to have covered its own positions using funds from customers' accounts – with Giddens saying "the amount of money MF Global should have segregated for customers may be short by $1.2 billion or more."

"I simply do not know where the money is," echoed John Corzine, chief executive of MF Global when it collapsed, in testimony to Congress last week.

On New York's Comex exchange, the number of bullish minus bearish contracts held by noncommercial gold futures and options traders – the so-called speculative net long – rose 4.7% in the week ended 6 December, its first gain since the opening week of November, data published Friday by the Commodity Futures Trading Commission show.

Despite the bullish signal, "the weak market remains highly volatile to news flow," says this morning's note from precious metals consultancy VM Group, point out that gold prices have since fallen substantially.

On the ETF front, the volume of gold bullion held to back shares in the SPDR Gold Trust (ticker: GLD) – the world's largest gold ETF – has fallen slightly since the start of the month, from 1297.9 tonnes to 1295.4 tonnes as of last Friday.

By contrast, the volume of silver bullion backing shares in the iShares Silver Trust (ticker: SLV) – the world's largest silver ETF – has risen over the same period, gaining 0.6% to 9769.1 tonnes.

Here in Europe, stock markets traded lower Monday morning. In London the FTSE was down 0.6% by lunchtime, while Germany's DAX lost 1.6%.

Ratings agency Moody's meantime says it will review European sovereign ratings in the first quarter of 2012. Fellow ratings agency Standard & Poor's last week placed every Eurozone nation on CreditWatch negative – often a precursor to a sovereign downgrade.

Friday's EU summit "doesn't tackle the shorter term problems," says Commerzbank economist Peter Dixon.

"Yes, we have a plan in place to tackle the longer term problems but... I'll be very surprised if it actually generates the results many EU leaders are currently hoping for."

"The lack of progress in as far as socializing liabilities is concerned prevents any major involvement of the ECB and or the creation of common bonds in the short term," adds Jacques Cailloux, chief European economist at Royal Bank of Scotland.

Leaders agreed on Friday to lend up to €200 billion to the International Monetary Fund, which the IMF in turn could then lend to Eurozone governments. There are suggestions that some of this money could come from central banks.

However, if central banks were to lend to the IMF, "the money cannot migrate into some sort of special pot that is used exclusively for Europe," Bundesbank board member Andreas Dombret tells German newspaper Handelsblatt.

"That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out."

By Ben Traynor
BullionVault.com

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 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