Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Rally Stlls But Investment Demand Remains Strong

Commodities / Gold and Silver 2010 Aug 18, 2010 - 08:32 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD held in a tight range around $1225 an ounce early in London on Wednesday, little changed by a drop in commodity prices and the first fall for a week in European equities.

Government bond prices rose, pushing 30-year German Bund yields down to a record low of 2.97%.



The Japanese Yen rose back towards ¥85 per Dollar – nearing a 15-year high – as Tokyo policy-makers prepared to discuss intervening in a meeting on Friday.

"We view liquidity and low real interest rates as the fundamental drivers of gold investment demand," says today's report from Walter de Wet and his team at Standard Bank.

"Even if risk appetite improves, gold should rise."

Over in the currency markets today, the British Pound jumped 1.5¢ – recovering all of Tuesday's loss – after minutes from the Bank of England's latest interest-rate meeting showed policy-makers noting that "UK inflation has been above target in all bar nine of the past 50 months."

The gold price in Sterling fell back to last week's finish at £780 an ounce, more than 5% above late-July's four-month low, but 10% below June's record peak.

Today's minutes showed that the committee still voted 8-to-1, however, to keep base rate at its historic low of 0.5% – some 2.6% below Tuesday's official reading of UK inflation – and maintain the Bank of England's current £200 billion of quantitative easing.

"The European Central Bank must make its actions [similarly] transparent, at least retroactively," said German coalition partner Frank Schaeffler, head of the Free Democratic Party, in a newspaper interview yesterday.

The ECB has "crossed the Rubicon" by buying government debt from the ailing "olive states", Schaeffler believes.

"The ECB's [political] independence is not carte blanche for breaking the law."

Meantime in the United States, "Why isn't the Fed acting more aggressively?" asks a blog at The Economist today, dismissing the answer given in a speech yesterday by Minneapolis Fed president Narayana Kocherlakota, that "Most of the existing unemployment represents a [structural] mismatch that is not readily amenable to monetary policy.

"Firms have jobs, but can't find appropriate workers," claimed Kocherlakota, who becomes a voting Fed policymaker next year. "The workers want to work, but can't find appropriate jobs."

The Euro meantime failed for the sixth session running on Wednesday to break above $1.29 to the Dollar, a level first reached in late 2004.

Formerly showing a strong connection with the gold price in Dollars, the Euro/Dollar exchange rate ended Tuesday with a correlation to gold of minus 0.23.

That figure would read +1.0 if gold and the Euro moved in lockstep together against the US currency, or minus 1.0 if they moved in absolute opposition – a perfectly negative correlation very nearly achieved for the first time ever at the height of the Greek debt crisis in mid-May.

From the Euro's launch a decade ago to end-2009, the single currency averaged a strongly positive correlation with the gold price of +0.52 (rolling one-month correlation, daily changes.

So far in 2010, that average has sunk to a statistically insignificant minus 0.02.

"Gold's upside breach [this week] has re-established some upside momentum," says the latest technical analysis from Scotia Mocatta.

"$1250 remains a logical short-term target."

But "Gold it finding some resistance at the old December 2009 high," counters Phil Smith at Reuters Technical in Beijing, "[where] we could still be forming another top.

"Volume has been tailing off," Smith repeats, "which is consistent with such a pattern."

"Volumes seen this week have been increasingly thin," agrees a London dealer, "and are making it more difficult to believe that gold's run from $1157 to $1229 can be sustained."

"I would say there's still light buying from India" after last month's bargain-hunting below $1200, says a Hong Kong dealer quoted by Reuters. "There's a bit of selling of scrap after the price hits a new high."

Typically quiet during the summer and harvesting months, gold demand from Indian consumers – the world's No.1 buyers – is due to return with the autumn festival and wedding seasons, culminating in early November.

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.

(c) BullionVault 2010

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

6 Critical Money Making Rules