Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Struggling Near $1200

Commodities / Gold and Silver 2010 Jul 08, 2010 - 09:22 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF PHYSICAL gold bounced from a new 6-week low early in London on Thursday, but struggled to hold above $1200 an ounce as world stock markets jumped together with commodity prices.

Silver prices touched a 1-week high at $18.24 an ounce as the gold price in Dollars rallied from its May 25th low at $1186.16.


Neither the European Central Bank or the Bank of England altered their record-low interest rates of 1.0% and 0.5% respectively, leaving government bonds little changed.

"Given the wave of buying across the investment spectrum of Gold in recent months, it is not surprising there has been some profit taking," says July's new Metal Matters for clients of bullion-bank Scotia Mocatta.

Analyzing last week's broad "correction" in global asset prices, "Long liquidation may initially affect gold," the report says, but "we feel the end result will be increased investor fear.

"That is likely to see more money move into gold as a means to protect wealth."

New data today showed Germany's trade surplus falling in May, even as the Euro currency slid towards four-year lows.

UK manufacturing output also disappointed analysts, while British house prices showed their first month-on-month drop, on average, since March according to the Nationwide lender.

World economic growth, however, was today revised higher for 2010 to 4.6% by the International Monetary Fund, with the US and China set to expand their GDP more quickly than previously forecast.

"Current global macro-economic risks, such as the European sovereign debt crisis and strong money-supply growth, make a strong case for an additional tactical overlay to gold in reserves," says Natalie Dempster, director in Government Affairs at market-development body the World Gold Council.

"A sovereign debt downgrade to below investment grade reduces the pool of eligible investments for many central banks, while contagion risks lower the attractiveness of similar assets.

"Furthermore, the 2007/2009 financial crisis clearly changed what could be perceived to be markets which are deep and liquid. Gold, which bears no counterparty risk and is permissible as a reserve asset, has remained highly liquid through the worst of the financial crisis, and hence becomes especially attractive in the current environment."

Meantime today, Tuesday's news of central-bank "gold swaps" with the Bank for International Settlements – often called "the central banks' central bank" – was revised after the BIS denied that central banks were its counterparties.

"The operations concerned were purely market operations with commercial banks," the BIS said in an email, refuting an article in the Wall Street Journal which said the 346 tonnes of gold used to secure $14 billion in currency loans were directly owned by sovereign states.

"Nevertheless, there is one thing of which we can be sure," says the FT's Alpha blog today. "The bulk of gold-swapping did take place in January, and that coincides with the expiry of the Federal Reserve's Dollar swap-line facility."

At its peak amid the collapse of Lehman Brothers, the US Fed's Dollar swap-line with Eurozone banks hit $585 billion. The facility was re-opened as the Greek debt crisis worsened in spring 2010.

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.


© 2005-2022 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