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 Recovers and Stocks Bounce Ahead of US Interest Rate Cut

Commodities / Gold & Silver Mar 18, 2008 - 11:01 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES ticked higher vs. both the Dollar and Euros in London on Tuesday, gaining more than 1.3% from an overnight dip against each currency as global stock markets bounced after Monday's shock losses.

By lunchtime in London – where the AM Gold Fix was set nearly $20 below Monday's record of $1,023.50 per ounce – the MSCI World Index stood 0.9% higher to show its first gain since Wednesday last week.


The Dax index of blue-chip German stocks reclaimed 160 of Monday's 269-point loss, while Wall Street futures turned higher on news that Goldman Sachs – the world's biggest investment bank – saw earnings fall by one half but still beat analyst forecasts in the three months ending Feb. 29th.

Lehman Bros. saw net earnings fall by 59% over that period, it said today. The bank is widely rumored to face a similar cash shortage to Bear Stearns before its $2 per share fire-sale on Sunday.

"Everyone wants to know how bad it's going to get," says Glenn Marci at DZ Bank in Frankfurt . "Will banks recover this year or will the crisis stay with us for longer?"

"I wouldn't be that surprised if [the Federal Reserve] went for a 100-basis points cut."

Ahead of the Fed's latest interest-rate announcement – due out 14:15 EST today – crude oil recovered $1.50 of Monday's $4.50 plunge to reach $107.56 per barrel, while the US Dollar held steady near yesterday's new record lows on the currency market.

Base metals led by nickel bounced from yesterday's multi-year record falls, but grain prices continued to slip away from their historic highs of early 2008.

"The worst is yet to come" in soft commodities, reckons Hiroyuki Kikukawa at IDO Securities in Tokyo . "People want out of all markets and will try to keep cash in their hands for now."

Gold was the only hard asset not to lose value against the US Dollar on Monday, ending the session 0.3% higher in New York . Amid the panic in bonds and stocks, Gold beat silver (down 1.9%), platinum (down almost 3%) and crude oil (down 4.1%).

The UBS-Bloomberg index of commodity prices sank by 4.5% yesterday, the sharpest fall in its 11-year history.

"[But] the Fed is eager to save the economy at any price, even inflationary pressure, and that is favorable for commodities," says Eugen Weinberg at Commerzbank in Frankfurt .

"If we have a cut of one point you'll see another spike in commodities."

A survey of 101 professional economists by Bloomberg News puts the median forecast for today's US Fed rate-cut – due out 14:15 EST – at 0.75%. Anything bigger would be the sharpest cut since 1984.

The prime minister of China , Wen Jiabao, said today he is "deeply worried" by both the US slowdown and its fast-sinking US currency.

"Global economic developments cannot but have an impact on China," Wen said at the close of the annual National People's Conference, adding that he's concerned about "when the US Dollar might reach bottom and what kind of [monetary] policy the US would adopt [from here]."

An un-named "authoritative institution" says $461 billion of hot money poured into China from overseas speculators in 2007, according to China Daily , pushing the nation's foreign reserves to $1.53 trillion.

Premier Wen today admitted that China will struggle to cap consumer-price inflation below his target of 4.8% in 2008. Last month inflation reached 8.7% year-on-year.

The United Kingdom today reported consumer price inflation rising at the fastest pace since May last year at 2.5% in Feb. The more trusted Retail Price measure rose 4.1% year-on-year, and the rising pace of inflation – threatening the need for higher interest rates from the Bank of England – helped push the Pound higher from Monday's 12-year lows vs. the Euro and Japanese Yen.

It also capped the Gold Price in Sterling just below £500 per ounce.

"People are looking for some kind of port in the storm," reckons Simon Weeks at Scotia Mocatta, the precious metals dealer.

"I would expect the Gold Market will outperform the other metals as people look for a safe haven. Excess cash is not going into anything speculative."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2008

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.

Adrian Ash Archive

© 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