THE PRICE OF GOLD rose back above $1100 an ounce in late Asian trade on Thursday, rising further in London's short pre-Christmas session as world stock markets ticked higher together with US Treasury bonds.

Crude oil pushed above $76 per barrel. Base metals and most agricultural commodities also rose.

"Buying has returned to the [gold] market," said Mitsui's London office this morning in a note.

"Market remained quiet until near [Tokyo's] Tocom close," said its Hong Kong desk. "Buying suddenly emerged and shorts started to cover."

Recovering three-quarters of this week's 3.5% drop against the Dollar, gold also rose sharply for UK investors, breaking £690 an ounce at the London AM Gold Fix.

French, German and Italian buyers saw the price hold beneath €766 an ounce as the Euro jumped to a one-week high of $1.44 on the forex market.

Long-term demand to hold US Dollars "is set to weaken" said a note from Barclays Capital on Thursday, noting that its share of new global central-bank reserves fell below 30% between July and Oct., "unprecedented in a period of US Dollar weakness."

"The Bank of England has bought more gilts over the last nine months than the government has issued," says Julian Callow, also at Barclays Capital.

"This is going twist dramatically the other way in early 2010. Markets know this."
Today 10-year UK gilt yields rose above 4.0% for the first time since July and only the second time since Nov. '08 as prices fell.

"Markets are demanding a risk premium on Sterling," says Callow.

German Bunds offered 3.32% by Europe's early lunchtime close on Thursday.

Ten-year US Treasuries yielded 3.74%.

By Adrian Ash
BullionVault.com

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

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

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.