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
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Trends Depend on US Policy

Commodities / Gold and Silver 2011 May 09, 2011 - 08:42 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD reversed half of a 1% rally to $1510 per ounce in London on Monday, easing back as the US Dollar rose on the forex market and European stock markets fell hard.

US crude oil contracts stalled after a 2.7% rally took them back to $100 per barrel.


The silver price rallied to $38.00 at Monday's London Fix, rising more than 11% from Friday lunchtime's Fix.

"More than 36 million ounces of silver [was] dumped into the market between April 26 through this past Thursday," reports the Wall Street Journal of last week's ETF trust-fund holdings, "more silver than all the American Eagle silver coins that investors bought from the US Mint last year."

Slipping back as the start of New York drew near, the silver price on Monday traded more than one-quarter below late April's 3-decade record.

Drifting back down to $1503 per ounce in wholesale London trade on Monday, Dollar gold prices remained 4% lower from last week's new all-time high of $1576.

"Overall, we seem to be witnessing the impact of the unwinding of QE2 with risky assets taking a hit," said one London-based bullion dealer on Monday.

If QE2 has indeed caused a bubble in many asset classes, adds a bullion dealer in Hong Kong, then "the most risky asset class would respond first."

"We do not expect gold to slump excessively in the coming weeks," says a note published by German precious metals group Heraeus. "The political, financial and economic uncertainty seems far too high for this to happen."

"The fundamentals have not changed and investors are back," agrees Naoki Mita, vice president at Barclays Capital.

"Physical demand [for gold] continues to prevail at these lower prices," adds Swiss precious metals group MKS Finance.

"The only notable decline in physical buying has been from China...South East Asian and Indian demand has remained firm."

Over on the forex markets on Monday, the Euro reversed an earlier bounce to trade near Friday's 3-week lows, hit after German newspaper Der Spiegel claimed that Athens is considering taking Greece out of the 17-nation Eurozone currency union.

"We have not been discussing the exit of Greece from the Euro area, this is a stupid idea, it is in no way an avenue we would never take," said Jean-Claude Juncker, president of the Euro finance minister group, after a previously secret meeting late Friday.

Pointing to the next discussion of Greek debt restructuring – scheduled for May 16 – "We don't want to have the Euro area exploding without reason," he added.

Gold prices for Euro investors today rose above €33,750 per kilo, a 1-week high less than 2.5% below Dec. 2010's all-time high.

"It is too early to say that silver has started to rebound, as it is still stuck in a descending channel," said a trader to Reuters in Tokyo, where markets re-opened today after the long Golden Week holidays.

"What will eventually decide the silver price trend is US monetary policy...From a medium-to-long term perspective, $35 is a reasonable level to buy."

With volatility tripling in the last month, "Silver is inherently much more volatile than gold," warns French banking group Credit Agricole in a note.

Gold's daily volatility today stood below its 4-decade average, remaining less volatile than US equity markets.

"Given the magnitude of the pullback [in commodities], it does create an opportunity for more upside potential," says Jeffrey Currie, head of commodity research at Goldman Sachs in London, who last month advised investors to go "underweight" raw materials.

"In the very near term" investors should be "a little cautious," he adds.

"We think that the early May sell-off has recalibrated the markets to more reasonable, but still excessive, valuations," added derivative broker MF Global in its monthly commodity review.

"This is not a turning point," believes Kevin Norrish, London-based managing director at Barclays Capital.

"We'd expect to see a pretty good recovery from these levels before too long."

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.


© 2005-2019 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