Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
The Inflation Mega-trend and UK House Prices - Housing Market Analysis Trend Forecast 2022 to 2025 - 5th July 22
Gold Price Summer Seasonal Doldrums - 5th July 22
Tame Budgies Having Fun on a Grape Vine - UK Parakeet Easy Training - 5th July 22
Is the US Yield Curve Inversion Broken? - 3rd July 22
New Signs Economic Turmoil Will Prompt Fed to Lose Its Nerve - 3rd July 22
Stagflation With Powell Could Make Gold Price Happy - 3rd July 22
UK Housing Market Analysis, Trend Forecast 2022 to 2025 - Part 2 - 30th June 22
Stock Market Turning the Screws - 30th June 22
How to Ignore Stocks (and why you should) - 30th June 22
Top Tips For Getting The Correct Insurance Option For Your Needs - 30th June 22
Central Banks Plan To Buy More Gold In 2022 - 30th June 22
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold at $890 on Merrill Lynch $15billion Mortgage Loss

Commodities / Gold & Silver Jan 11, 2008 - 08:50 AM GMT

By: Adrian_Ash

Commodities

SPOT GOLD PRICES for immediate delivery held 1% below their new overnight records in London early on Friday, flipping around $890 per ounce as the US open drew near.

"Yesterday the Gold Market looked bearish on the day [but] after the initial dip we had a rally of $30," says this morning's note from the metals dealers at Mitsui in Sydney .


"Today it looks as though $900 should be tested – but beware, it is a Friday after all!"

Thursday's sharp rally – and the following surge to almost $898 per ounce – came after Ben Bernanke, chairman of the Federal Reserve, signaled further cuts to US interest rates that look sure to destroy the purchasing power of the Dollar further still.

Then this morning the New York Times said Merrill Lynch, the largest US investment broker, is about to announce new losses on its mortgage investments totaling $15 billion.

"People are surprised at the huge loss," said one Tokyo bond-fund manager to Bloomberg. "The equity market collapsed and the bond market rallied."

By lunchtime in London the price of two-year US Treasuries had risen to push their yield down to 2.67%, a three-year low that's sharply negative after inflation. The FTSE100 share index stood 0.7% lower for the day after the Japanese Nikkei had earlier finished the week another 1.9% lower.

Tokyo 's leading stock market index has now dropped one-tenth of its value since the start of this month.

"The outlook for real activity in 2008 has worsened," Bernanke said in Washington yesterday. Evoking the easy-money spirit of Alan Greenspan, "we stand ready to take substantive additional actions as needed to support growth and to provide adequate insurance against downside risks," the current chairman went on.

The Dollar immediately dropped 1.5 cents to the Euro, but that failed to spot the Gold Price in Euros also shooting higher.

By early afternoon in Frankfurt on Friday, gold was trading above €603 per ounce – more than 1.7% higher from the same time on Thursday in a clear challenge to the European Central Bank's much-touted "anti-inflation" stance. Ben Bernanke's comments seemed to contrast sharply with yesterday's statement from ECB chief Jean-Claude Trichet, who kept Eurozone rates on hold at 4.0%.

Trichet told a press conference after the ECB's decision that it remains in a state of "total alertness" on the risk of wage demands pushing inflation higher. But Trichet's jaw-boning is no substitute for tight money; money-supply growth in the 15-nation currency zone now stands at a three-decade record, and the Gold Price for German, French and Italian investors has gained nearly 10% in the last month alone ( Parlez-vous central banking? Read more on Trichet, the Euro & Gold here... )

"People are looking at the geopolitical calendar in 2008, and they're looking at Iran and at what's happening in Pakistan ," says Jonathan Barrett of Commodity Broking Services in Sydney .

"They're [also] looking at inflation out of China and India ; those economies still are growing. Add a little bit of financial risk – actually a lot of financial risk – in America , and I think that's a concern."

Bank of America said today it is buying Countrywide for $4 billion in stock. The No.1 US mortgage lender is rumored to be on the very verge of bankruptcy.

"I also think that people now have the means to invest in gold," Barrett added on CNBC's Squawk Box today. "Remember in China we've now got a new gold [futures] market there.

Meantime "central banks looked at gold a long time ago and said they were going to get out of gold, now they're getting back in," Barrett went on, citing the central banks of Russia , China , South Africa and the Middle East as gold buyers right now.

In the broader commodities market today palm oil futures and Malaysian soybean prices hit all-time records. The European Cocoa Association said its members' output fell to a three-year low at the end of 2007, down 2.9%.

Copper prices continued to rise in London , pushing towards their best weekly finish since Sept. after new data showed a sharp increase in demand from China – the world's largest consumer of the metal.

But oil prices, in contrast, continued to fall, adding to Thursday's 2% loss and heading for the sharpest week-on-week fall since Nov. after China reported a drop in its rate of money-supply growth.

The broad M2 measure of China 's money supply rose by a mere 16.7% in the year to Dec. said the People's Bank this morning. Down from 18.5% in Nov., the rate of monetary inflation in the world's fastest-growing economy still slipped to only a seven-month low, however.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2007

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.

Adrian Ash Archive

© 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