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
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
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 Strong Demand from India, China and Middle East

Commodities / Gold & Silver Feb 06, 2008 - 01:09 PM GMT

By: Mark_OByrne

Commodities Gold's recent sell off continued and gold was down $18.30  to $886.60 per ounce in trading in New York yesterday and silver was down 42 cents to $16.31 per ounce. Gold traded sideways to slightly up in Asia and early trading in Europe and is up to $890. Silver has also fallen and is down to $16.56 per ounce.

Gold was stronger in the other major currencies .The London AM Fix at 1030 GMT this morning was at $892  (up from $889.75 yesterday). Gold fixed at £455.61 (up from £452.06  yesterday) and €610.88  (up from €605.60 yesterday).

Gold's weakness has continued with the dollar strengthening and oil weakening but the sharply weakening US economy, strong inflationary pressures (wheat surged to new record highs yesterday) and negative real interest rates will create safe haven demand for gold. Yesterday's services sector data was extremely bad. It was the weakest ISM reading since October 2001 (immediately after 9/11) and this in conjunction with the raft of other negative data (including the very poor jobs number of Friday) would suggest that the US is already in a recession.

The question continues to be not whether there is a recession but rather how deep is the recession and what from does it take. Given the massive imbalances facing the US economy and the unprecedented property, credit and soon to be solvency crisis, this recession will not be a shallow and benign one as experienced in recent history. Rather it is more likely to resemble that of the stagflationary 1970's or of the Japan's lost decade of deflation in the 1990's. Weimar Germany's hyperinflation is unlikely at the moment but if ‘Helicopter Bernanke' continues to rain paper dollars on the US economy in order to prevent a 1930's style deflationary depression, a virulent form of inflationary recession could take hold.

Physical Demand from India, Middle East and Asia
There has been a continual refrain from the bears that the decline in demand from India was negative for gold. This was claimed when gold reached $500, $600, $700, $800 and now $900. We have pointed out that this is extremely simplistic. India is a price sensitive gold buyer and thus will support the market on any sell off in gold's price. Just yesterday there were indications that Indian buyers were buying physical below $900.

More importantly, there is now extremely strong physical demand globally and in particular from China, wider Asia and the Middle East.

Turkey's gold imports in January, according to the Istanbul Gold Exchange, jumped 69.4% above December's to 18.55 metric tonnes. This was also 16.1% above January '07. January's weighted average $US price, according to the Exchange, was 10.4% above December's and a startling 41.2% above January '07. Presumably much of the buying was done in the brief break below $890 January 17-23rd.

China gold futures were recently launched on the Shanghai Futures Exchange (SFE). "The launch of gold futures is very welcome as investors are eagerly looking for new investment tools given the stock market's high valuation and volatility, and the property market is under severe control," Hu Yanyan, a gold futures analyst with Shanghai Jiuheng Futures Brokerage, said.

Bloomberg reported that the start of trading in Shanghai was "the biggest event in the gold market since the launch of the gold exchange-traded funds over the past few years,'' John Reade, analyst at UBS Ltd. in London wrote in a report. "Futures will allow leveraged investment in gold from Chinese investors and speculators.''

"Chinese investors obviously have enthusiasm for gold and the futures provide them with a leveraged, low-cost exposure to bullion,'' Zhu Bin, head of research at Nanhua Futures Co., said by phone from Hangzhou. "Given the wobbly equities market and gold's continuous climb in the past seven years, everyone seems to think that gold is a good investment.''

Support and Resistance
Support is now at $850 to $860 and this should provide strong support and make a good buying opportunity for those with a medium to long term outlook.

As the Wall Street sell off continued across Asian and further into Europe this morning, the FX markets turned risk averse. The biggest gainer in this was the Japanese Yen, with most high yielding currencies being sold aggressively against the Yen.

The Euro continued its sell off prompted by weaker than expected Eurozone PMI figures released yesterday morning. The Euro fell across the board almost erasing the previous two days gains against Sterling and the Dollar. The uptrend still remains intact however while the Euro remains above 1.4300 against the Greenback and above .7390 against Sterling. A close this weak below 154.00 for EUR/JPY could trigger the next downward leg for this currency pair.

A combination of lower commodity prices and risk aversion saw the commodity currencies fall against the dollar.

Silver is trading at $16.40/45 at 1200GMT.

Platinum has sold off from new record highs and is trading at $1795/1805 (1200GMT).

Palladium has also sold off and was trading at $413/418 an ounce (1200GMT).

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ph +353 1 6325010
Fax  +353 1 6619664
Gold Investments
Tower 42, Level 7
25 Old Broad Street
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708


Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

© 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

6 Critical Money Making Rules