Gold & Silver Rise as Dollar Falls
Commodities / Gold and Silver 2010 Mar 31, 2010 - 07:38 AM GMTBy: Adrian_Ash
THE PRICE OF GOLD & SILVER bullion rose against a weakening US Dollar in London on Wednesday, ticking higher as Asian shares ended the day lower and European stock markets held flat.
"A close above $1097 today will give gold its sixth consecutive quarterly gain," says the daily note from Mitsui's London team.
"Silver fixes higher in Europe, gold firm," says Reuters, repeating Tuesday morning's headline.
The Euro rose towards a 1-week high against the Dollar meantime on the currency market, while the British Pound jumped once again to breach a near-2 week high at $1.5150.
"Spot gold in Euros remains well bid and did not even [dip to] our previously forecast €800 support region," writes Axel Rudolph, technical analyst at Luxembourg's Commerzbank, in his latest weekly report.
Staying "short-term bullish" on silver, "We remain medium-term neutral as long as the silver price remains contained within its three month resistance line at 17.97 and the 15.59 late-Feb. low," says Rudolph.
Adding 7.7% against both the Euro and Pound Sterling since the start of Jan. 2010, the gold price today rose above $1110 per ounce for Dollar investors.
Silver today came within 10 cents of a 10-week high at $17.61 per ounce, some 4.1% higher from the first-quarter's start.
"Whenever gold falls we see good physical buying coming in," the Reuters newswire quotes one Europe-based trader.
"Even on the private customer side, there's pretty good demand for coins and bars."
New data meantime said on Wednesday that private-sector employers in the United States shed 23,000 jobs last month.
Official non-farm data is due when the European, London and New York markets are closed for Good Friday.
Unemployment rose to 10.0% in the Eurozone in Feb., Brussels reported – the first double-digit rate since mid-1998 – as analysts expected.
Consumer prices rose faster than forecast this month, however, adding 1.5% from this time last year across the 16-nation currency union.
Ten-year German Bund yields dropped to 3.10% as the Dax stock index struggled to break-even on the day.
Ten-year UK gilt yields dropped back through 4.00% as prices rose.
"When investors start to fear an increasing chance of default because the government's finances don't make any sense and they price that default into bond yields, it looks like Latvia," writes Berkeley professor Brad De Long today.
De Long contrasts the Baltic state's 14% long-term bond yields with 10-year US Treasuries, offering 3.86% early on Wednesday morning.
"That is not – repeat NOT – REPEAT NOT!! – what we see in the US. Not at all. We have $3 trillion more of US government debt held by the public than we did two years ago, and lower long-term interest rates."
Tuesday saw the yield on 7-year Treasury bonds follow 10-year US yields, however, in rising above open-market interest rates for non-government borrowers.
Such "swap" rates have been negative on UK government bonds since early March.
"It's all about relative Government bond supply," says a note from Jim Reid at Deutsche Bank in London, adding that "government [debt] issuance is likely to remain high for as far as the eye."
By Adrian Ash
BullionVault.com
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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
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