Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Caught Between Euro and China

Commodities / Gold and Silver 2010 Mar 25, 2010 - 10:21 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF WHOLESALE gold bullion gave back an early bounce from yesterday's 6-week low for Dollar investors on Thursday, slipping back to $1090 as Chinese shares closed the day lower, but European and US stocks rose.

Little changed for Sterling buyers, gold was higher against the Euro as European leaders met to discuss the Eurozone debt crisis.


"We don't see decisive actions telling the market we can solve this," said Zhu Min, deputy governor of the People's Bank of China – and a special advisor to the International Monetary Fund from next month – after German chancellor Angela Merkel said the meeting would discuss possible IMF and partner support for Greece, but "no concrete help".

The government of Dubai meantime pumped $9.5 billion into the ailing Dubai World property group – 60% of it using emergency loans made by neighboring Abu Dhabi.

"Gold [was] a battleground between the Euro and Chinese buyers today," said one Hong Kong dealer earlier. "Chinese buying wanted to push it higher, but the Euro pulled lower.

"Silver prices mostly followed gold in tandem," bouncing from a 3-week low at $16.53 an ounce.

Looking at Wednesday's New York action, several analysts point to the Dollar gold price falling through "the neckline of a head and shoulders top" – a chart-formation which "bodes ill for the near future" – around $1090.

"Gold is now looking at a crucial support level at $1080," says one London analyst – "where the trendline dating back to Oct. 2008 began.

"If this support breaks down, we'll be headed for the recent low and 200-day moving average near $1050."

On the forex market meantime, the single European currency – which typically shows a strong, positive correlation with gold's daily moves vs. the Dollar – bounced half-a-cent from Wednesday's new 10-month low beneath $1.33.

European Central Bank president Jean-Claude Trichet today confirmed to the Brussels parliament that emergency rules allowing lower-quality assets to be used as collateral for ECB loans will be extended to Jan. 2011 or beyond.

"[This is] to address any new stress situations...particularly for sovereign issuers in the Eurozone," noted UniCredit Research, "with positive implications for Greek and periphery [member-state] bonds."

German government debt eased back on the news as Greek bond prices rose.
 
The Euro-price of gold bullion recovered last week's finish above €818 an ounce.

"Symptoms of weaknesses are starting to appear more clearly in gold investment demand," says the latest Commodities Weekly from French bank Natixis, noting zero growth in global gold ETF holdings, plus the sharp fall in gold coin sales reported by both the US and Austrian Mints from 2009's record levels.

"Investment accounted for 32% of total demand in 2009 but only 6% in the previous 5 years," says Natixis' note, adding that recent news from China and Peru suggest gold mining output will further extend last year's growth in 2010.

"A fall below 10% of global demand is a highly likely scenario [for investment] in 2010."

Longer-term, however, "The world is currently mining gold faster than it is finding it," said Richard Schodde of MinEx Consulting at the PDAC conference in Toronto earlier this month.

"Furthermore, the average size and grade of gold discoveries continues to decline."

"The largest gold producers face a constant battle to replace their annual production," agrees Paul Burton, managing director of GFMS World Gold, writing this week in the London consultancy's latest quarterly letter.

Noting that large copper-gold deposits offer the most viable acquisition targets for major gold mining producers, "They need to find big ore bodies – the 'elephants' – in order to maintain their momentum and growth," says Burton. "[But] few have been found in recent years and that is despite record gold prices spurring unprecedented investment in exploration.

"The easy [gold] deposits have been found already it seems."

Adrian Ash

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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