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 Reacts Negatively to US Election But Still Above Long-Term Uptrend

Commodities / Gold and Silver 2012 Nov 05, 2012 - 09:00 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleSPOT MARKET gold bullion prices rallied above $1680 an ounce Monday morning in London, having earlier fallen to a nine-week low, while stock markets edged lower and US Treasury bonds gained, with one day to go before the US presidential election.

The US Dollar Index, which measures the Dollar's strength against other major currencies, rose to a two-month high.


"Gold is still holding the long-term uptrend support at $1631," says the latest technical analysis from bullion bank Scotiabank.

"There is also support at $1661."

Silver bullion rallied back to $31 an ounce, while on the commodities markets, oil was broadly flat while copper prices edged lower.

Gold remains more than 2% off where it started the month, while silver is down more than 4%, after both metals fell sharply on Friday following the release of better-than-expected US nonfarm payroll data.

Bullion dealers in Asia meantime "are not in a rush to buy because there is plenty of supply around," one Singapore-based trader told newswire Reuters this morning.

"But if prices drop below $1650, there will be good demand and supply will tighten up."
This Sunday sees the festival of Dhanteras in India, followed by Diwali two days later, both traditionally associated with buying gold.

"The peak marriage season is immediately after Diwali," says Mehul Choksi, chairman of Indian jewelry group Gitanjali.

"We expect sales to grow by 35-40% this Dhanteras."

"If gold remains at the current price level," adds Kumar Jain at Mumbai jewelers Umedmal Tilokchand Zaveri, "jewelry sales will definitely surge as people are also buying for the marriage season."

In the US, the so-called speculative net long position of Comex gold futures and options traders – the difference between the numbers of bullish long and bearish short contracts held by traders classified as noncommercial – fell for the third week running in the week to last Tuesday, weekly figures published Friday by the Commodity Futures Trading Commission show.

"Given the excessive length of the past weeks and a rising uncertainty among investors over the ability of QE3 to support prices and/or the longevity of the Fed's open-ended commitment to easing, the liquidations [of long positions] are unsurprising," says Standard Bank commodities strategist Marc Ground.

"The market is considerably less strained than it was several weeks ago — net speculative length as a percentage of open interest has come off considerably...which could see some consolidation emerge."

With one day left before the US election, opinion polls show Barack Obama and Mitt Romney are neck and neck.

"Obama is clearly 'favored' by the commodities markets," says a note from Commerzbank, "mainly because of his support for Ben Bernanke and the ultra-expansionary monetary policy of the US Fed, [but] any 'disappointment' if Romney should come out on top is likely to be short-lived."

"The financial markets might not like [an Obama win]," adds Steve Barrow, head of G10 research at Standard Bank.

"The Dollar could go down...[but] we don't expect any weakness to last—at least not against the Euro. For here there's something of a gap opening up between the US's economic performance and that of the Eurozone."

Greek prime minister Antonis Samaras has promised MPs that a fresh round of austerity measures would be "the final one", ahead of a parliamentary vote on reforms this Wednesday. The result of the vote could influence whether or not Greece gets its next tranche of bailout money, worth €31 billion.

"The Greek risk could come to a head this week," says Holger Schmieding, chief economist at Berenberg Bank.

"Greece matters as a trigger of potential contagion to the much bigger economies of Italy and Spain."

The number of unemployed in Spain rose by 128,200 last month, official figures published this morning show, considerable more than expected.

Some European sovereigns could potentially reduce their borrowing costs by issuing bonds collateralized with gold bullion, CNBC reports, citing Tilburg University economist Sylvester Eijffinger.

Eijffinger is the latest economist to back such an idea, which has been proposed by the World Gold Council and which the subject of a draft paper published by the European Parliament in September.

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.


© 2005-2022 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