Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Jumps as Fed Comments Hit Structurally Weak Dollar

Commodities / Gold and Silver 2010 Jan 04, 2010 - 11:17 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF WHOLESALE GOLD jumped higher in Asia and early London dealing on Monday, kick-starting 2010 with a 1.8% gain to hit two-week highs as world stock markets rose together with base metal and energy prices.

Government bonds fell, as did the US Dollar – down to $1.44 per Euro by mid-afternoon in Frankfurt.

The Bank of England meantime reported a sharp decline in Britain's money-supply growth.

Investor sentiment across the Eurozone rose to its best level since May 2008 on the Sentix survey, but still lagged analyst forecasts with a negative reading.

"There were different reasons for [gold's 2009] gains," notes Swiss refiner MKS in a note. "For physical gold, it was mostly buying interest by investors and speculators and buybacks of hedging positions by the [mining] producers.

"Also, national central banks became buyers. China, India, Russia and Mauritius stocked up on their gold reserves."

Looking ahead to 2010, Standard Chartered's Helen Henton – the most accurate 2009 forecaster in Bloomberg News' survey – said gold bullion will continue to rise on "central-bank buying, the structural change in interest for gold from retail investors, and in the second half the resumption of the weakening trend in the Dollar."

Henton sees the gold price averaging $1150 this year – up from the 2009 average of $974 per ounce – before rising again to $1300 in 2011.

Shorter-term, the first week of the New Year brings a flood of key US data, starting today with the ISM Manufacturing Index.

"Most notable is Friday's US non-farm payroll data," says commodities analyst Walter de Wet at Standard Bank, noting that the much better-than-expected November report was "instrumental in triggering the current Dollar rally.

"With gold close to $1100, dips are likely to be bought [and] we continue to see physical buying in the gold market...As we head into Q1 (a low seasonal period) we could see this demand slow [but] overall we still believe gold will trade higher in 2010."

Recording the first London Gold Fix of 2010 at $1113 per ounce, gold stood 28% higher from the start of 2009 and 294% above the AM Fix of Jan. 4th a decade ago.

US crude oil contracts meantime broke above $81 per barrel early Monday, following news of the worst snowfall in Beijing and Seoul for 50 years, plus an unresolved dispute between Russia and Belarus over export duties on supplies destined for Europe.

The US National Weather Service forecast two weeks of "below-normal" temperatures for the eastern United States. They account for well over 80% of national heating oil demand.

Silver for immediate delivery rose almost 1.9% in London dealing this morning, while base metals extended their 2009 rally, which helped the CRB commodities index achieve its strongest year-on-year gains since 1973, up by 24%.

Copper hit a 16-month high as miners began a strike at Chile's Chuquicamata, the world's second largest copper project, responsible for 4% of global output.

China – which accounts for 43% of world base-metal demand according to J.P.Morgan – today reported its strongest ever PMI Manufacturing survey. Brokerage and research house Enam last week forecast a 15% rise in China's aluminum demand for 2010.

Across the Pacific, "We have the most potentially inflationary policy I have ever observed in a developed country," says Alan Meltzer, a central-bank historian and professor at Carnegie Mellon's Tepper School of Business in Pittsburgh, speaking to Reuters.

The Conference Board says US consumers now expect 5.1% annual inflation on average. A private-bank survey says 61% of its clients foresee "above target" inflation between 2011 and 2014.

"The Fed and Bank of England are unlikely to hike rates before the fourth quarter, while the Bank of Japan and European Central Bank should either leave rates unchanged all year or cut," reckons Steven Barrow, chief forex strategist at Standard Bank.

"We believe that the Fed will not exit monetary easing as fast as it entered...We remain structurally bearish of the Dollar on a long-term view."

Speaking amid a growing debate on the re-emergence of a "bubble" in commodities, equities and precious metals, Federal Reserve chairman Ben Bernanke denied in a speech on Sunday that the Fed was to blame for the sub-prime and financial bubbles of 2004-2007.

"The best response to the housing bubble would have been regulatory, not monetary," Bernanke said, restating a position made clear throughout his academic career.

A raft of new regulations introduced by the communist government in Hanoi, Vietnam on New Year's Day, including a ban on margin trading in leveraged gold investment products.

Besides imposing stock-market taxes of either 0.1% upfront or 20% of net gains – as well as a fine equal to $270 for singers caught lip-syncing at live performances – prime minister Nguyen Tan Dung ordered the closure by end-March of more than 20 gold exchanges which currently allow private investors to trade on credit with only 7% down.

The central bank had previously recommending forcing leveraged investors to pay the full cash-price for their gold.

Source of Asia's largest gold demand outside mainland China, Vietnam's local gold prices rose more than 50% during 2009, driven by a sharp devaluation in the Dong, frantic gold accumulation by private households, and a government ban on new imports of metal.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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 , 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 - 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