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
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Continues "White-Knuckle Ride" as "Uninspiring" Policymakers "Limit Upside" for Stock Markets

Commodities / Gold and Silver 2011 Sep 09, 2011 - 07:25 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold prices plunged sharply Friday morning in London, hitting a low of $1826 per ounce – 4.9% down on Tuesday's all-time high – while stocks and commodities also fell and European government bonds gained.

Going into the weekend, the gold price at Friday lunchtime looked headed for 3.3% weekly drop after speeches from US and European policymakers did little to calm market nerves.


"Gold prices enjoyed a white-knuckle ride this week," says a note from French investment bank Natixis.

"There are very good reasons why people long on gold may be taking profits," Jesper Dannesboe, analyst at Societe Generale, told Bloomberg this morning when asked about Friday morning's sudden drop.

Dannesboe cited a stronger Dollar, as well as the technical explanation that gold prices are forming a so-called 'double top' – an M-shaped-pattern than some technical analysts view as bearish.

"The swings have been quite dramatic in the last two weeks between $1704 and $1920," adds a report from bullion bank Scotia Mocatta.

"We do not [however] expect sizeable liquidation unless $1704 breaks."

Silver prices meantime fell to $41.37 per ounce – 4.3% down for the week so far.

European stock markets fell Friday morning. In London the FTSE was down 0.6% by lunchtime, while the German DAX was off over 1% – and down 7.6% since the start of the month.

The Euro Stoxx 50 index of leading Eurozone shares meantime was down 1.3% – also making a 7.6% loss for the month so far.

"The economic situation is getting worse," says Markus Steinbeis, head of equity portfolio management at the Pioneer Investments in Unterfoehring, Germany, which manages around $221 billion. 

"It depends more than ever on what policy makers will do. As long as economic indicators remain as they are right now and emerging markets are tightening their monetary policies, the upside should be limited."

On the US markets meantime, the correlation among the largest 250 stocks in the S&P 500 has reached 81%, research from JPMorgan shows – suggesting stocks prices are moving together in response to wider market conditions rather than individual company fundamentals. This is the highest level since the stock market crash of 1987, the Financial Times reports.

President Obama announced his "jobs plan" on Thursday, exhorting Congress to pass $447 billion in proposed spending and tax cuts. Press reports ahead of the announcement predicted the package would be worth $300 billion.

"The plan reflects the government's deep concern about the economy," adds Duan Shihua at Haitong Futures in China.

"[It raises]the real possibility of another round of quantitative easing, which is supportive of gold."
"Markets have been uninspired [by the plan]," adds Marc Ground, commodities strategist at Standard Bank.

The US Federal Reserve meantime will "do all that it can to help restore high rates of growth and employment in a context of price stability," Fed chairman Ben Bernanke said in a speech on Thursday.

"The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus...[we] will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September."

The Federal Open Market Committee is next due to meet on 21 and 22 September, with the meeting extended to two days rather than the usual one.

Here in Europe, the European Central Bank has "delivered price stability impeccably," outgoing ECB president Jean-Claude Trichet told reporters on Thursday. 

Trichet was responding to the suggestion that some German economists are privately calling for a return to the Deutsche Mark, as well as comments from German opposition leader Sigmar Gabriel that the ECB's purchases of Eurozone government debt was putting "the stability of the currency in danger".

"It is not by chance that we have delivered price stability," said Trichet. "We were asked [by Eurozone governments] to decrease rates in 2004...we said 'No'."

Over in China – the world's second largest gold bullion consumer – industrial production growth slowed to 13.5% year-on-year in August – down from 14.0% a month earlier – according to official data published Friday. Chinese consumer price inflation meantime fell to 6.2% last month – down from 6.5% in July.

Former Libyan leader Muamar Gaddafi sold 29 tonnes of gold bullion – 20% of the country's reserves – during his final weeks in power, according to Libya's new central bank governor.

"The gold was liquidated in order to pay salaries and to have liquidity, in Tripoli in particular," said Qassem Azzoz on Thursday.

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.


© 2005-2019 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