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 Loses 1.3% for the Week, Chinese Demand for Gold to Get Stronger

Commodities / Gold and Silver 2011 Jun 24, 2011 - 08:36 AM GMT

By: Ben_Traynor

Commodities Best Financial Markets Analysis ArticleTHE SPOT PRICE to buy gold traded in a tight range around $1520 an ounce Friday morning London time – 0.5% above its one-month low – having fallen in Asian trading, while stocks gained after comments from China's premier that inflation in that country is under control.

Spot oil prices dipped Thursday after the International Energy Agency said it will release 60 million barrels of oil from strategic reserves.


Going into the weekend, the Dollar gold price was headed for a 1.3% loss for the week Friday lunchtime. 

The Sterling price to buy gold, meantime, slid to £947 per ounce Friday morning – slightly below last week's close – following a hectic day Thursday which saw it plunge 1.8% from its record high.

The silver price slid to $34.68 – a 3.3% drop on the week.

"We are bullish on gold while the metal holds above $1504," says technical analysts at bullion bank Scotia Mocatta. 

If the price to buy gold falls below $1500, however, it could slip as far as $1463 they warn.
"Our long term view on gold remains unchanged," says Walter de Wet, commodities strategist at Standard Bank.

"We believe gold will continue to push higher in 2011."

China's manufacturing sector has barely grown in June, according to HSBC's purchasing managers' index, prompting fears that China – the world's second largest gold bullion market – is heading for an economic "hard landing".

HSBC's PMI – which is published roughly a week ahead of the official PMI – fell to 50.1 for June, down from 52 in May. A figure of 50 or above shows growth, while below 50 shows contraction.

"Demand is cooling due to the effects of tightening measures and slackness in external markets," said Qu Hongbin, HSBC's chief economist for China.

"The good news is that inflationary pressures started to ease meaningfully in June," following May's rise in consumer price inflation to 5.5%.

"China has made capping price rises the priority of macroeconomic regulation," writes China's premier Wen Jiabao in Friday's Financial Times.

"The overall price level is within a controllable range and is expected to drop steadily. The output of grain, of which there is now an abundant supply, has increased for seven years in a row."

"Inflation may peak in June or July," agrees Hua Zhongwei, Beijing-based analyst at Huachuang Securities. 

"But there are many underlying factors that could push up prices such as labor cost and agricultural product inflation." 

China's largest farming company, Heilongjiang Beidahuang, last week signed a joint venture with Cresud of Argentina to farm soybeans. The company also plans to spend $1.5 billion leasing farms in Argentina's Rio Negro province, on which it will grow a range of crops, including wheat and corn.

China also expects to import a record 2 million tons of corn from the US this year, according to Ding Shengjun, senior researcher at China's Academy of State Administration of Grain.

"Importing the corn from the US is a practical way to stabilize the domestic price," says Ding.
Chinese demand to buy gold, meantime, will continue rise as a result of ongoing inflation fears, according to Zhang Bingnan, secretary general of the China Gold Association.

"Enthusiasm for gold as an investment will get stronger," says Zhang, adding that gold investment demand "will keep doubling in the next two years." 

Here in Europe, the EU announced Friday that it has agreed a deal to provide fresh financial aid to Greece – subject to the Greek parliament passing €78 billion worth of austerity measures.

"This is an important decision that says once again we will do everything to stabilize the Euro overall," said German chancellor Angela Merkel.

The deal will involve "a voluntary rollover of bonds so that it will not create a credit event," said Olli Rehn, European commissioner for economic affairs.

"Foreign banks will struggle to justify rolling existing holdings unless the rate at which they can do so is economically viable," warns Mark Schofield, global head of interest rate strategy at Citi.

Rates that are "potentially attractive to investors, are not sustainable for Greece and would, if locked in, lead very quickly to insolvency".

By Ben Traynor
BullionVault.com

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

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(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