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 & Silver Hit 1-Week Low "on Euro Fears"

Commodities / Gold and Silver 2011 Mar 10, 2011 - 07:52 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF BOTH gold and silver bars fell hard against the Dollar in London on Thursday, dropping to 1-week lows – as did the single Euro currency – after the Moody's rating agency downgraded Spanish government bonds and China reported a surprise trade deficit for Feb.

Brent crude oil dropped more than $2 per barrel. World stock markets lost over 1.2%, with London's FTSE-100 falling to a 5-week low.


"Uncertainty over Euro negative news is outweighing general financial stress, which should be gold positive," says one London dealing desk.

"There has been no change in physical [gold] market activity," says James Zhang at Standard Bank, "which remains lacklustre even though prices have moved lower.

"With no news on developments in the Middle East-North Africa region, most investors are waiting on the sidelines."

Here in London on Thursday, the Bank of England voted to leave UK base rates unchanged, pegging them at a record low of 0.50% for the 25th month in succession – the longest stretch of unchanged rates since the two decades of 2.00% starting in the depths of the 1930s' Great Depression.

Lagging the cost of living at the worst pace since 1978, real interest rates are now delivering a net loss of 4.5p in the Pound to cash savers per year.

Over in Beijing, meantime, the People's Republic today posted a trade deficit equal to $7.3 billion for last month – the biggest deficit in 7 years.

"It could be just a blip," says a note from IHS Global Insight in London, with many other analysts also pointing to Feb.'s long Chinese New Year holidays and gift-giving festivities.

"[But] China would have run a surplus of $16 billion over the first two months of the year if commodity prices were unchanged from a year ago," counters Mark Williams, senior economist at Capital Economics.

A net importer of gold despite now being the world's No.1 mining producer, China saw 200 tonnes of demand during Jan. and Feb. according to an estimate from Swiss bank and bullion market-maker UBS.

Gold imports totaled 209 tonnes between Jan. and Oct. last year, the Shanghai Gold Exchange said in Dec. – a rise of more than four times from the same period in 2009.

In silver bullion, China exported a net 1,075 tonnes as recently as 2006, but it imported nearly 3 times that much in the first eleven months of 2010 alone, according to customs' data.

"Changes in net Chinese imports appear to be closely correlated to longer-term price movements in the silver market," noted David Jollie at Mitsui recently.

Back in Thursday's action, "There are short-term traders and investors who want to reap profits after the rally," said Seoul-based trader Chae Un Soo at KEB Futures to Bloomberg today.

"Losses will be limited as there's an enormous interest in gold and precious metals."

Asian trading saw the market "[run] out of ideas to push the metals either way," says a Hong Kong dealer in a note.

Silver prices in London today bounced higher from $35.12 per ounce – some 4.5% below Monday's new 31-year high.

The gold price bottomed at $1418 – just shy of the then-peak prices hit 3 times between Nov. and Dec. last year, and 1.9% below this week's new all-time high.

Versus the Pound Sterling and Eurozone single currency, in contrast, both gold and silver were unchanged for the week by lunchtime today.

Less than a week after downgrading Greek government debt yet again, the Moody's agency this morning nudged Spain's credit rating lower, citing  "high funding requirements, not only for the sovereign but also for the regional governments and the banks."

"We are surprised that Moody's has taken this decision before knowing the details of the [Bank of Spain's] report on the recapitalization of the Spanish financial sector," said Treasury director Soledad Nunez to Reuters.

Government bonds including weaker "peripheral Europe" rose in price as stock markets fell, however, nudging interest rates lower even on Spanish debt, where 10-year yields ticked back down to 5.50%.

France meantime became the first country to recognize Libya's opposition party, the NLC, as the oil-producer state's legitimate government.

The International Red Cross today called the on-going conflict a "civil war", while Nato chiefs planned a meeting to discuss enforcing a 'no-fly zone' above Libya to prevent further air strikes by Gaddafi loyalists.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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 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.


© 2005-2022 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