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
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
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20

Market Oracle FREE Newsletter

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

Gold and British Pound Tumble on Deflationary Recession

Commodities / Gold & Silver Nov 12, 2008 - 07:34 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD dropped $10 an ounce in the first-half of London trade on Wednesday, sliding to a 6-session low as Asian stock markets closed down for the day and European equities gave back an early 1% gain.

"Sentiment [in the Gold market] is still pretty negative," reckons Narayan Gopalakrishnan, a trader at metals refinery group MKS Finance in Geneva, Switzerland, speaking to Bloomberg.


"With Dollar firmness and oil not helping," gold could fall back to last month's 13-month low of $680 an ounce, he believes.

Commodity prices sank yet again this morning, while government bond prices rose and the British Pound plunged to a fresh six-year low on a miserable forecast for growth and prices from the Bank of England.

The Japanese Yen retreated 1.5% from a two-week high vs. the Euro.

"The US Dollar index is close to its highest level this year (seen in October)," reports Mitsui, the precious metals dealer, in its daily note, "and if the current trend continues it is more likely that we will see the precious metals test the lower end of current ranges.

"The pressure on the oil price is relentless," Mitsui adds, "as falling demand from a global recession kicks in. After breaking and closing below $60 yesterday, the January 2007 low of $50 now looks like a target."

The price of light-n-sweet crude oil fell this morning below $59 per barrel, a new 20-month low, ahead of today's US inventory stockpile report – expected to show a collapse in petrol demand.

Copper futures traded at the London Metal Exchange fell 6%. Nickel and lead prices both fell more than 5%.

"The [commodities] supercycle has a flat tyre," says Martyn Davies, executive director of Stellenbosch University's Centre for Chinese Studies, speaking to South Africa's SAfm radio station.

"Perhaps by 2013 things will start to pick up again. But that's a good five years away. I think the sentiment in the Chinese mining space is that this is not going to be a one-, two-year play."

Today the World Bank said it will offer $100bn of fresh aid to those developing countries worst hit by the collapse in global trade.

International trade is set to shrink next year, the World Bank warned – the first contraction since 1982 – cutting expected GDP growth amongst emerging economies from 6.4% to 4.5%.

Each percentage point decline pushes an extra 20 million people into poverty, the World Bank believes.

After the Federal Reserve and US Treasury refinanced giant insurance group AIG with a $150 billion package on Tuesday, "banks in the US and abroad are among the biggest winners," reports the Wall Street Journal .

"Many banks that previously bought protection from the insurer on collateralized debt obligations backed by subprime-mortgage bonds, commercial-mortgage loans and other assets stand to recoup the bulk of their investments under a plan by AIG and the Federal Reserve Bank of New York to buy around $70 billion of those securities via a new company."

Across the Atlantic in Paris, meantime, "a new French agency will make its debut in the international bond markets this week," the Financial Times says, "raising bail-out funding for the country's banks."

The Société de Financement de l'Economie Française (SFEF) plans to sell €3-5 billion of three-year bonds this week, hoping to repeat the successful issue of £10bn of government-backed banking bonds in London.

Analysis from Standard & Poor's says that Europe's banks need to refinance €1,150bn ($1,477bn) of debt over the next three years.

Today the Gold Price in Euros held above €580 per ounce, while the Gold Price in Sterling jumped to £482 on a fresh plunge in the UK currency.

The British Pound fell to a new six-year low vs. the Dollar of $1.5200 after the Bank of England warned in its quarterly report that inflation could sink to 1% from the current 5.6% rate in 2010.

The Bank's fan chart of potential paths for inflation include a possible deflation in prices – unseen in the UK since 1933 – by the end of 2009. Already in recession, economic output is forecast to shrink for the next 12 months.

UK unemployment jumped by 142,000 in the three months to end-Sept., the official data agency said today, taking the jobless total above 1.8 million – a level last seen when the current New Labour administration took power in 1997.

Average earnings in the UK – including bonuses – meantime lagged growth in the cost of living by more than 2.5% in the year to October.

The Bank of England's governor – career academic Mervyn King – today flatly denied there had been "any pressure whatsoever" from the UK government to cut interest rates.

Last week the BoE slashed its key lending rate by 150 basis points to just 3.0%, a five-decade low that took real interest rates to a 28-year low of minus 2.6%.

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