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
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
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Pressure Mounting on Gold, But Central banks Still Adding to Reserves

Commodities / Gold and Silver 2012 Jun 27, 2012 - 06:13 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold prices dropped as low as $1565 an ounce during Wednesday morning's London trade – 1.4% down on this week's high – before recovering some ground by lunchtime, while stock markets posted slight gains ahead of tomorrow's European Union summit.

Silver prices traded below $27 an ounce for most of this morning, while other industrial commodities were broadly flat on the day by lunchtime.


On the currency markets meantime, the Euro was broadly flat against the Dollar, trading just below $1.25 for most of the morning.

"We're in a bit of a period over the summer when we are going to see very little meaningful action by policymakers in three key regions – Europe, the US and China," reckons Daniel Brebner, head of metals research at Deutsche Bank.

"Pressures in the gold market will continue to mount...I don't think there's any kind of catalyst near term for a significant rebound in gold prices."

Brebner adds however that he expects "very steady buying by central banks" to continue, which "should help gold prices from weakening too much".

At tomorrow's EU summit, Italian prime minister Mario Monti is expected to propose using money from Eurozone bailout funds to ease sovereign borrowing costs by buying debt on the open market, the Financial Times reports, despite the policy drawing criticism from Bundesbank president Jens Weidmann after it was put forward last week.

Weidmann described the idea as "state financing via the central bank printing press", prompting Monti to respond that the Bundesbank chief has "badly misunderstood" the proposal.

Italy sold €9 billion of six-month bills Wednesday, at an average yield of 2.96% – up from 2.10% last month.

"Today's bill sale points to the sovereign getting this supply away but at yield levels sufficiently elevated to leave a niggling doubt at least as to the medium-term sustainability of the country's public finances," says Rabobank strategist Richard McGuire.

Italy's rise in borrowing costs follows an auction the previous day that saw 2-Year yields rise to 4.71%, their highest level since December.

Italy is due to auction €5.5 billion of 5-Year and 10-Year bonds tomorrow. On the bond markets, 10-Year bonds traded at yields as high as 6.2% Wednesday morning, up from 5.9% at the start of June.

Elsewhere in Europe, German chancellor Angela Merkel told the German parliament Wednesday
there is no "magic formula" that will solve the Eurozone crisis.

"It is imperative that we don't promise things that we cannot deliver and that we implement what we have agreed," said Merkel, adding that joint liability for sovereign debts "can only happen when sufficient controls are in place."

"I don't see total debt liability as long as I live," German chancellor Angela Merkel reportedly told her Free Democrat coalition partners Tuesday.

Over in Madrid, the Spanish government has scrapped a tax rebate for homeowners brought in six months ago by prime minister Mariano Rajoy to meet election promises, citing its growing budget deficit.

"The deficit has started on a downward path and we expect that to intensify," said deputy budget minister Marta Fernandez Curras Tuesday.

Here in London, Bank of England governor Mervyn King cited "worsening...in the [economic] position in Asia and other emerging markets" as a reason he voted for an additional £50 billion of quantitative easing earlier this month.

"We are in the middle of a deep crisis," King told the Treasury Committee on Tuesday, "with enormous challenges to put our own banking system right and challenges for the rest of the world that they are struggling with."

Proposed additional QE was defeated by five votes to four at the June Monetary Policy Committee meeting. The MPC makes its next policy announcement Thursday next week.

The central banks of Kazakhstan, Russia, Turkey and Ukraine were among those who added to their gold bullion holdings last month, according to figures published Tuesday by the International Monetary Fund.

India's central bank meantime is considering banning the sale of gold coins by the country's banks, according to India press reports on Wednesday.

Indian trade with Dubai meantime totaled $10 billion in the first quarter of this year – making India Dubai's biggest trading partner ahead of China – data published by Dubai Customs show. gold bullion represented both the biggest import and biggest export for Dubai.

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 2012

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