Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
UK Housing Market Analysis, Trend Forecast 2022 to 2025 - Part 2 - 30th June 22
Stock Market Turning the Screws - 30th June 22
How to Ignore Stocks (and why you should) - 30th June 22
Top Tips For Getting The Correct Insurance Option For Your Needs - 30th June 22
Central Banks Plan To Buy More Gold In 2022 - 30th June 22
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Hits New USD High as Europe's "Bail-Out Bounce" Fails

Commodities / Gold and Silver 2010 May 11, 2010 - 12:49 PM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD hit a new record high against the US Dollar at Tuesday's PM Fix in London, surging more than 3% from yesterday's low as world stock markets fell once again with commodities.

The Euro dropped 4¢ from yesterday's "bail-out bounce", giving back most of Monday's gain to trade below $1.27.


Gold priced in Euros touched fresh highs above €30,970 per kilo.

"Gold is bullish, as global financial markets are battling to gain traction," says Walter de Wet at Standard Bank.

"The market still doubts the success of any rescue package put in place in Europe. This is evident in US government bond yields that are pushing lower again as investors flee to safe-haven assets.

US investors wanting to Buy Gold saw the price jump to $1222 by mid-afternoon in London today, beating the previous Gold-Fix peak of $1218 set in Dec. '09.

Adding 3.2% from late-Monday, the gold price in Sterling also came within a few pence of last week's record high at £825 an ounce. But the Pound then spiked sharply on the currency market – undoing an overnight drop – on rumors that the current Labour government "knows" its coalition talks with the Liberal Democrat party "are over".

British government bonds also whipped higher as an apparent Conservative-led coalition looked likely.

"Gold continues to derive gains from the weakness in the Eurozone," says one London dealer in a note.

"Only a close back below $1169 will cause a long liquidation," says the latest technical analysis from bullion bank Scotia Mocatta.

European equity markets recovered a sharp drop to close Tuesday 0.4% lower after Asian shares dropped 1.1%.

US crude oil contracts crept back above $77 per barrel after an early loss.

The silver price extended its gains, meantime, adding 12% from last week's low to come within 40¢ of Dec. 2009's three-decade high at $19.49 an ounce.

"Can the plan work?" asks senior UBS economist George Magnus of the €750 billion 'stabilization mechanism' announced by European leaders as Asian markets began trading yesterday.

"It will work to the extent that Greece is now fully funded for the next 2-3 years and does not have to return to private markets for financing. [But] it will not stop Greek public debt rising to 150% of GDP by 2013. And it will have to be carried out as the Greek economy contracts by at least 10% over the next three years.

"Greece is a complete fiscal disaster," agree Simon Johnson and Peter Boone, former IMF and current MIT economists respectively, writing in the Financial Times and widening the issue to Portugal, Spain, Ireland and "perhaps Italy..."

"We cannot escape the possibility that gold reserves may ultimately form some part of an eventual solution," says the latest Commodities Weekly from French bank Natixis.

"Those Asian central banks which hold excess reserves of Dollars hold negligible quantities of gold...Italy, Germany and France are three of the world's top five holders of gold."

Promising one-third of the Eurozone's €750bn backstop funds, the International Monetary Fund recently sold 18.5 tonnes as part of the 400-tonne sale begun in 2009.

"Call it folly or call it catching a rising tide," says GFMS Analytics director Rhona O'Connell, writing at MineWeb, "but when the IMF sold a total of 23.5 million ounces of gold in the second half of the 1970s it was selling into a seemingly inexorable rising price.

"In this current frenetic environment, investment and speculative appetites are proving hard to sate. If any more IMF metal were to come into this market at the moment it would probably be snapped up."

By Adrian Ash
BullionVault.com

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 www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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.


© 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