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
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

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

Gold on the Slide as Indian Demand Passes Peak with Diwali

Commodities / Gold & Silver Oct 21, 2008 - 10:27 AM GMT

By: Adrian_Ash

Commodities WHOLESALE SPOT GOLD PRICES slid again in London on Tuesday morning, dropping 2.9% towards a fresh one-month low at $776.60 per ounce while the US Dollar rose to its best level since March 2007 and the stock market rally faltered in Europe.


Lower Gold Prices are helping the physical market satisfy its appetite," notes Mitsui, the precious metals dealer in London, pointing once more to the Indian festival of Diwali festival that takes place next Tuesday.

Buying Gold during this Hindu "festival of lights" is deemed to be auspicious. The World Gold Council (WGC) marketing group now expects Indian gold imports this quarter to match last autumn's record levels.

"This demand should act as a cushion to the ailing Gold Price ," says Mitsui's gold note today. "Major support lies at $730 an ounce."

As the Dollar-price of gold slipped today, the US currency also gained on the forex market, rising to its best level vs. the Euro in 19 months and stronger by one-fifth from mid-July.

The Gold Price in Euros – which hit new record highs above €685 an ounce 10 days ago – held above €589. For British investors wanting to Buy Gold today, the wholesale "spot" price bounced off £456 per ounce, five per cent down from this time last week.

Crude oil fell back below $74 per barrel, despite a clear threat that the Opec oil cartel will cur production quotas when it meets on Friday.

Base metals also sold off, led by a 3% drop in aluminum futures.

London's FTSE100 equity index reversed an early 1.5% bounce, while the German Dax turned negative to stand more than 17% lower for October so far.

"We believe the normalization of money markets should support precious metal prices as liquidity returns," says Walter de Wet for Standard Bank in Johannesburg, "[but] a strong Dollar would make large price rallies difficult to sustain."

The $3 trillion now promised by major world governments to shore up their domestic banks continued to reduce money-market interest rates on Tuesday.

The gap between 3-month US Treasury yields and London's inter-bank lending rates dropped to 3.15%, down from the record 4.50% hit at the start of last week. Interest rates on so-called "commercial paper" – meaning short-term debt issued by corporations – fell to a four-month low in New York.

Monday saw US businesses start registering to sell their commercial paper straight to the Federal Reserve, borrowing directly from government coffers for the first time since the Great Depression.

The bankrupt state of Iceland is borrowing $6 billion from International Monetary Fund (IMF) – the first such bail-out of a Western nation since Britain's rescue in 1976.

The French government is pumping €10.5 billion ($14bn) into Paris's six largest banks as part of a €360bn package to support and guarantee their debts.

Greece today agreed a €28bn deal proposal to recapitalize its banking sector.

"The high-leverage model of finance is bankrupt," said Stephen Green, chairman of the $167 billion HSBC bank, to a conference in Dubai last night.

Even so, however, the securitization and re-sale of banks loans will have to continue, he believes, because "you cannot bring the whole of the world's capital markets back on to banks' balance sheets."

But while governments and central banks flood the banking sector with new cash, the world's supply of gold – an alternative to official currency since Gold was Cut Free from the Dollar in 1971 – remains ever-more strictly limited.

"The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines on-stream," reports Reuters today.

EuroMoney's Latin Finance notes that the South American equity market, including the mining sector, is now "littered with unfinished mergers & acquisitions."

South African Gold Mining junior Pamodzi Gold will miss this year's production targets  by up to 45%, says Business Report in Johannesburg, after struggling to raise the R400 million ($38.77m) in new debt.

Four junior mining companies have now postponed their listing on the Johannesburg Stock Exchange (JSE) for 12 months or more due to the global credit crisis.

South African Gold Mining production between June and end-August fell 17.5% from the same period in 2007.

Cost-price inflation in the mining sector worldwide meantime ran to a massive 20% annually on some analyst estimates.

"Physical gold demand looks relatively robust," believes Frederic Lasserre, head of global commodities research at Société Générale in Paris, "but sentiment remains very nervous towards gold at present.

"The nature of last week's sell-off suggests that this represents a buying opportunity [in bullion], but the market may not yet see it that way."

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