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 Hovers as Dominance of Dollar Could End as IMF Considers Increasing Liquidity

Commodities / Gold and Silver 2011 Nov 04, 2011 - 09:46 AM GMT

By: Ben_Trayner


Best Financial Markets Analysis ArticleDOLLAR PRICES for gold bullion continued moving in a range bound fashion around $1758 an ounce – 8.3% up from where they began October – after the release of US nonfarm payroll data, which showed the US economy added 80,000 jobs last month.

The unemployment rate meantime fell to 9.0% in October – down from 9.1%, where it spent the previous three months.

Silver bullion meantime hovered around $34.40 per ounce – 14.8% above where it started last month – while stocks, commodities and government bond prices were also flat.

Heading into the weekend, gold bullion prices were looking at a slight gain of around 1% for the week – though the trough-to-peak difference was 5%. 

"A chaotic session [on Thursday] brought gains for all four precious metals, albeit with some vicious swings along the way," said one gold bullion dealer in London this morning.

"Yesterday's price action seemed in thrall to the constantly changing headlines emanating from Europe."

"I think gold is really supported by the [crisis in the] Eurozone," adds Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

G20 leaders meeting in Cannes are considering using the International Monetary Fund's Special Drawing Rights as a way of boosting global monetary liquidity, newswire Reuters reports.

SDRs are accounting units created by the IMF and allocated by it to member countries, and take the form of a weighted currency basket comprising Dollars, Euros, Sterling and Yen. They were introduced in 1969 to support the Bretton Woods fixed exchange rate system, which was effectively ended two years later when US President Nixon cut the Dollar's link to gold bullion.

"The G20 will be specific in their determination to increase resources," an unspecified G20 official told Reuters, "but it is unclear how specific they will be."

"Global the dominant causal driver for gold," argued Walter de Wet, commodities strategist at international gold bullion Standard Bank, back in August – reiterating Standard's long-held position on what is driving the gold price.

The IMF has also proposed creating a new six-month lending facility, which could form part of the mechanism by additional SDRs are used to boost global liquidity, the Financial Times reports.

"This has been in the works as a way to provide some assurance to emerging markets that their interests won't get completely sidetracked if the Fund focuses on Europe in its lending operations," says former IMF official Eswar Prasad, now at Washington think tank the Brookings Institution.

"It is a savvy move by the G20 and IMF to justify an SDR allocation and other mechanisms to add to the IMF's resource pool by signaling that the new resources won't be devoted entirely to saving Europe."

Brazil's finance minister Guido Mantega last month opposed the notion of Brazil buying European bonds, adding that any assistance should come through the IMF.

G20 leaders should "reform the SDR currency basket," China's president told the summit on Thursday, "and build an international reserve currency system with stable value, rule-based issuance and manageable supply."

"The world is now loath to see the dominance of the Dollar," adds Li Jianjun, analyst at the state-owned Bank of China.

"[This] opens doors for change."

The Chinese government today published the text of President Hu's G20 speech.

"There is nothing [in the speech] to suggest China will stump up any cash to help Europe," says the FT's Chris Giles.

Greek prime minister George Papandreou meantime faces a confidence vote later on Friday. His governing Pasok party holds 152 of the 300 seats in Greece's parliament – though several Pasok members have said they will not support Papandreou, meaning he will need opposition support to win.

Papandreou last night dropped his call for a Greek referendum on last week's Euro Summit deal, which was previously expected to take place next month.

Italy meantime "has decided on its own initiative to ask the IMF to monitor the implementation of its [austerity] commitments," European Commission president Jose Manuel Barroso said Friday.

"The likelihood of Eurozone worries disappearing with a 'snap of a fingers' is very little," says a note from Swiss gold bullion refiner MKS.

"[This] will probably benefit gold in the coming sessions as the metal slowly regains is safe-haven and store of value characteristics."

By Ben Traynor

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 - 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