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
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
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20

Market Oracle FREE Newsletter

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

Gold Sinks to Test Critical Support Level

Commodities / Gold & Silver Sep 10, 2008 - 08:40 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD sank in Asia early Wednesday, falling 2.5% from the New York close to bounce off an 11-month low and hold around $774 in the first-half of London dealing.

This fresh sell-off in Gold came as world stock markets also fell once again, erasing Monday's "Fannie-n-Freddie" bounce on the back of Wall Street's worst down-day of 2008 so far.


Base metals and soft commodities continued their slide, while the US Dollar reversed an overnight dip to hold the Euro currency near a 12-month low beneath $1.41.

Crude oil crept higher, however, rising $3 above $100 per barrel after the Opec oil cartel switched tack at its summit in Vienna and said it will reduce output quotas this fall.

"The investment landscape may feel the same but, in fact, it is changing," says UBS analyst Jeffrey Palma in a note to clients, summing up the Dollar-forced slump in all asset classes.

"Specifically, we believe that investors need to re-orient their portfolios to exploit a continuation of three interrelated trends – lower interest rates, a stronger US Dollar and weaker global growth."

Early Wednesday, te US currency's on-going rally dented even US government bonds, pushing the yield offered by 5-year debt six basis-points higher to 2.92%.

That's still barely half the most-recent reading of US consumer-price inflation, however, and following the nationalization of $5.4 trillion in Fannie Mae and Freddie Mac mortgage debt at the weekend – now backed by the balance-sheet of the US government – the cost of hedging against a potential default on Treasury bonds reached a record level overnight, according to CMA Datavision.

Credit-Default Swaps (CDS) on five-year US bonds cost 0.18% by the London close on Tuesday. They were trading at one-third that price only five months ago.

Buying CDS insurance on comparable Japanese government bonds costs 0.16% today. Insuring against default on German bunds costs 0.08%.

Back in hard assets, meantime, "the overall picture for the precious metals is bearish," reckons today's note from Mitsui.

" Gold is sitting on a support line dating back to Q3 2005 at $760 (we have made a low of $762 so far). Silver has given back all of the gains since the credit crunch begun in August 2007, dropping to $11.

"Platinum is currently trading at $1220, testing the trend we have seen for the last seven years, and palladium continues to drop sharply, having made a low of $220 overnight."

But Wednesday's fresh fall in the precious metals market was less marked against the world's other major currencies, taking the Gold Price in Euros back to a three-week low of €542.

For British investors suffering a 12% in the Pound's trade-weighted currency index since mid-July, the Gold Price in Sterling slipped to £434 an ounce – a level last seen on August 20th.

Today Barratt Developments – the UK's second-largest home builder – canceled its dividend to shareholder, reported a 68% drop in annual profits, and announced 1,000 job losses.

"There is little prospect for any material improvement in trading conditions until mortgage finance and customer confidence return," said the firm's CEO, Mark Clare.

Estate agents previously enjoying a tripling of UK house prices since 1998 are now selling an average of just one property a week, according to the latest data from the Royal Institution of Chartered Surveyors.

Over in the world's physical Gold Market , "Demand from our regular customers such as India, Indonesia and Thailand is still there," said a Singapore dealer to Reuters overnight.

"There's a [continuing] shortage of physical bars in this region, which also helps support premiums."

( Can't get the gold you want at these lower prices today? Stymied by the Gold Coin Shortage ...? Buy live, online, at BullionVault ... )

The heavy Gold Buying season in India – the world's No.1 consumer of physical gold – will take a break for the Shradh remembrance week starting next Monday, before the festivals that culminate with Diwali in late October begin again on Sept. 25th with Gurupushyamrit, marked on the Hindu calendar as an auspicious time to start new ventures.

Jewelers in Indonesia also reported strong Gold Buying today ahead of next month's Muslim Eid al-Fitri celebrations. But on the other side of the trade, however, new Gold Mining ventures worldwide look increasingly unlikely to face problems raising funds thanks to successful lobbying by environmental groups.

Tuesday saw the $375 billion Norwegian state's wealth fund dump its entire holding in the giant, diversified miner Rio Tinto, accusing it of "severe environmental damage" at one mine in West Papua, Indonesia.

Rio holds 40% of the Grasberg site, operated by Freeport McMoRan, the US-based gold miner, and besides paying the Indonesian Army for "security" during the 1990s that saw several protestors disappear, "the operation dumps 230,000 tonnes of tailings, or waste rock, into the Ajikwa River every day, and campaigners claim that this has produced high levels of pollution," reports The Australian newspaper.

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