Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Rally Corrects After Strong Bull Run

Commodities / Gold & Silver 2009 Jun 03, 2009 - 06:01 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF PHYSICAL gold dropped 1.5% from new 14-week highs in lunchtime trading in London on Wednesday, turning higher from $975 per ounce as equity markets fell and the US Dollar rallied on the foreign exchanges.


"Higher interest rates would pose a risk to gold, but higher interest rates aren't going to happen," said Frank Holmes of US Global Investors in opening the World Mining Investment Congress in London on Tuesday – "much reduced in size this year from last" according to one delegate at the $6,000 event.

"If you are not long, you are going to be wrong on gold. Longer term, governments will do everything to print money and gold will slowly become an important asset class worldwide."

Today French, German and Italian investors now Ready to Buy Gold saw the price hold below €690 an ounce as the single currency retreated from a new 2009 high vs. the Dollar above $1.43.

The Gold Price in Sterling – trending lower since peaking at £700 an ounce on Feb. 20th – meantime flirted with 7-week lows near £590 after the British Pound leapt yet again on the currency market.

Hitting fresh 7-month highs above $1.66 to the Dollar, Sterling has gained more than a fifth from February's two-decade low.

"We have clearly had a case of selective myopia," writes Steve Barrow, currency strategist at Standard Bank in London, "where the market has ignored all the bad news about the UK and, instead, focused only on whatever crumbs of comfort that there have been."

Pointing to the net "short" position held by currency speculators still betting that the Pound will fall, Barrow repeats his call for $1.82 within a year – and perhaps "a lot sooner than we think" – because "the market is still not back to a more neutral position for Sterling."

Over in the commodities market on Wednesday, US crude oil futures moved sideways just north of $68 per barrel – a level first broken in Aug. '05 and more than 50% below last June's top – while copper prices at the London Metal Exchange eased back from yesterday's new 7-month highs.

Commodity specialists Platts report that copper traders from China – likely to remain a net importer in 2009 and buoyed by government stockpiling - have been offering to sell metal onto Japanese buyers after prices broke above $5,000 per tonne.

"China's steel industry will soon be swamped with raw material," the newswire goes on, quoting the China Mining Association's fear of 200-300 million tonnes of excess iron ore if recent stockpiling isn't unwound.

China imported more than 443m tonnes of iron ore in 2008, well over half of total global deliveries.

But "If [Asian central banks] make a loss, it's okay," said a source quoted by Reuters today.

"As long as they are sticking to the policy imposed from the very top, they are not concerned with short-term gains...They are not competing against mutual funds or hedge funds."

Speaking on condition of anonymity after US Treasury secretary Tim Geithner's series of meetings in Beijing this week, "The US Treasury bond is a partnership the Chinese government holds," the source went on.

China's central bank grew its stockpile of US government debt by 56% in the last year to $768 billion, says the newswire.

"What other central banks have been doing must be reversed," said German chancellor Angela Merkel, at a conference in Berlin on Tuesday.

"I am very skeptical about the extent of the Fed's actions and the way the Bank of England has carved its own little line in Europe."

The Federal Reserve has almost trebled its balance-sheet in the last 12 months, buying and lending against mortgage-backed and commercial-loan securities that were otherwise untradable.

Also slashing its interest rate to near-zero, the Bank of England has embarked on £125 billion of "quantitative easing" in the UK economy, effectively creating money to buy government debt, and covering well over 65% of this year total state spending.

"Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds," Merkel went on.

"We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years' time."

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 2009

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