Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Recovers One-Third of "Bernanke Plunge"

Commodities / Gold & Silver Jun 04, 2008 - 09:43 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES recovered one-third of yesterday's $18 plunge early Wednesday as crude oil slid to a three-week low and European equity markets dropped 2%, led lower by mining and banking stocks.

The Euro ticked higher against the Dollar, regaining a quarter of Tuesday's two cent plunge.


That fall was also sparked by Ben Bernanke, chairman of the Federal Reserve, noting the inflation risks posed to the United States by its weak currency.

"Bernanke's remarks strengthened speculation that the Fed may not cut interest rates further," says Shuji Sugata at Mitsubishi Futures & Securities in Tokyo , "preventing investors from putting money into commodities."

"With interest rate futures now pricing in a 98% probability of the Fed holding rates constant this month," agrees Manqoba Madinane in today's Gold Market note from Standard Bank, "plus a 30% probability of increasing rates by 25 basis points in October, we see the Dollar well supported in the near term.

"That could further contain near-term precious metals demand.

"Furthermore, equity index futures are also pricing in near-term gains in the US and Asia , which could see money flowing into equities."

Money flowed out of European stock markets on Wednesday, however, with the Cac40 in Paris and FTSE100 in London both losing 2% by lunchtime.

US stock futures pointed lower after the Financial Times said that Lehman Brothers – the fourth-largest US bank – lost $500-$700m in the last three month on "certain hedging positions".

The Wall Street Journal reports that, contrary to Lehman's own statements, the bank is looking to raise fresh capital from big foreign investors, already approaching "at least one" fund in South Korea .

The central banks of both Sweden and Norway warn that "the [subprime] turmoil has spread to new assets, markets and participants. The uncertainty...will probably persist for a long time to come."

Here in the United Kingdom , "ongoing economic weakness in 2009 would argue against fiscal restraint," says the Organization for Economic Co-Operation & Development (OECD) in its latest UK report. But "the government's options have been limited by excessively loose fiscal policy in past years when economic growth was strong."

The OECD forecasts a 10% drop in UK house prices by the end of 2009. Today the British Pound slid to a two-week low beneath $1.9535, helping the Gold Price in Sterling move back above £450 per ounce.

"It looks to me as if foreign central banks and sovereign wealth funds are losing faith in the UK," said Michael Saunders at Citigroup yesterday after the Bank of England reported non-residents selling gilts and Treasury bills at the fastest rate in five years.

Foreign investors funded some two-thirds of the UK 's current-account deficit between 2005 and 2007, Saunders told the Financial Times .

"I would say Gold is still in a range of $850 to $900 for the time being," said a dealer in Hong Kong to Reuters overnight, "We are all waiting for Friday's [official] US non-farm payrolls data."

Today brings the monthly ADP report of private-sector US payrolls, expected to show a loss of 30,000 jobs in May.

Early today the Mortgage Bankers Association (MBA) reported a 15% drop in US mortgage approvals for last week. Compared with the final week of May 2007, approvals stood 20% lower.

As the New York opening drew near, 10-year US bond yields slipped to 3.86% and two-year yields fell to 2.39%.

The rate of consumer-price inflation in the US was last pegged at 3.9%.


Tuesday's two per cent plunge in the Gold Market came after Fed chairman Bernanke said that the plunging US currency might lead to inflation inside the United States – a "highly unusual" move, as John Authers notes for the FT , "since the Fed does not have responsibility for the Dollar.

"That was taken as a hint by the foreign exchange market that government intervention could be on the way."

The drop also came as trading began in options on New York's GLD exchange-traded gold fund – formerly known as the StreetTracks ETF and now called SPDR.

"Trading got off to a fairly solid start," notes Chris Tyler for Optionetics, "although much of the activity had the earmarks of institutional players."

The most active contracts – "sporting a slightly bearish outlook" – were put options dated for July and Sept. They give their owners the right to sell the GLD fund at an equivalent Gold Price of $850 an ounce.

December puts pricing gold at $770 an ounce also saw volume exceed 2,000 contracts.

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

© 2005-2019 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