Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Slips Again But Zero US Rates, Eurozone Warned of "Imported Inflation"

Commodities / Gold and Silver 2011 Jan 27, 2011 - 09:04 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleWHOLESALE PRICES for physical gold fell back from the third overnight rally in four days in London  on Thursday, dropping 1.1% against the Dollar as Asian stock markets closed the day flat but European shares ticked higher.

"We don't feel that this downward pressure can persist, given ample global liquidity and low long-term real interest rates," says Standard Bank's commodity team in a client note.


The US Federal Reserve last night extended its policy of zero-interest rates and $600 billion in Treasury-bond purchases, promising for the 22nd month running to keep Dollar interest rates "exceptionally low...for an extended period."

Recording a London Gold Fix this morning of $1337.50 per ounce, gold priced in Dollars today stood 60% higher from Dec. 2008, when the Fed first cut its key lending rate to 0.25% and below.

Silver prices also slipped from an overnight rally, but stood more than 155% higher from 25 months ago at $27.39 per ounce.

"As long as the Fed keeps its loose monetary policy, it will be positive for gold," reckons Singapore analyst Yingxi Yu at Barclays Capital, speaking to Bloomberg.

"The Fed statement reflects uncertainty in the economic outlook, which has supported gold in the past couple of years. We view the price decline as a short-term correction."

Over on the currency market Thursday morning, the British Pound recovered the last of this week's losses to the Dollar – knocking gold for UK buyers back down to £835 per ounce – as the Euro hit new 3-month highs against the US currency.

Rising above $1.37, the Euro pushed the gold price down towards yesterday's 12-week low near €31,100 per kilo, despite new data showing Eurozone consumer and economic confidence both falling.

Wheat prices meantime eased back from new record highs and cotton jumped 3.5% – equal to the "limit up" maximum move allowed by the ICE Futures exchange – to hit fresh all-time highs in London trade.

Europe's Brent crude benchmark traded at a record-high premium to US crude oil, priced just shy of $100 per barrel.

"[Imported inflation] can no longer be ignored," said European Central Bank member Lorenzo Bini Smaghi in a speech in Bologna, Italy today.

Contradicting the "no response" policy advocated earlier this week by Bank of England governor Mervyn King, "It is necessary for the dynamics of costs and prices in advanced countries...to be significantly more contained than in emerging economies," said Bini Smaghi.

"Otherwise, monetary policy has to become more restrictive than it should be."

Belgian government bonds meantime slumped on Thursday after the mediator asked by King Albert to resolve the country's 228-day post-election political stalemate resigned.

The Japanese Yen also fell hard, losing over 1% to trade at two-week lows to the Dollar, after the Standard & Poor's rating agency downgraded Tokyo's debt one notch to "AA-", citing record-high national debt and "persistent deflation" that's left the Japanese economy no larger today than it was in 1993.

"As the [global] economy improves, you're going to see real interest rates move up," reckons Goldman Sachs analyst David Greely in New York, "and that's going to cap...the gold price.

"We think it is prudent for gold investors to begin to prepare for gold prices to peak."

"The market is starting to believe that the global economy can easily wean itself off of cheap money," counters Daniel Brebner at Deutsche Bank, also speaking to the Financial Times.

"We are not so confident that this is the case."

The volume of gold bullion held in trust for shareholders of the giant SPDR Gold Fund ended Wednesday unchanged from Tuesday's 8-month low of 1229 tonnes.

Losing more than 55 tonnes since late Dec., the GLD gold ETF has seen the sharpest month-on-month redemptions – by weight – since spring 2008.

In percentage terms, the big gold ETF's tonnage has now dropped by 4.7% in the last four weeks. It fell harder month-on-month in July 2009, each of May, Aug. and Sept. 2008, May 2007 and May 2006.

By asset value, the SPDR Gold trust fell harder last July.

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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 2011

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.


© 2005-2022 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