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 and Silver Continue to Tumble Against Rallying U.S. Dollar

Commodities / Gold and Silver 2010 Nov 16, 2010 - 11:05 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD fell for the sixth session running vs. the Dollar in Asian and London trade on Tuesday, dropping to a near-two week low as the US currency rose and global stock markets fell hard.

The Gold Price in Euros, Sterling and Japanese Yen also slipped, but lost just 0.5% from last week's finishes.


Broad commodity indices lost more than1% as crude oil futures dropped back to $83.50 per barrel.

The Silver Price fell to $25.35 per ounce, some 14% off last Tuesday's 30-year record high, after the Chicago Mercantile Exchange raised margin requirements on leveraged silver traders for the second time in a week.

The CME also raised Gold Futures margins by 5.9%, effective close-of-play today.

“Gold had accelerated away from the uptrend line, but...is pulling back again from an overbought condition,” writes Phil Smith at Reuters Technical in Beijing today.

“The usual negative correlation with the Dollar is back in place, and [long-term] the Dollar is moving steadily to the downside.”

“While we still think that the overall environment, characterized by quantitative easing and inflation concerns, remains bullish for the precious metals, we wouldn’t rule out further long liquidation in the immediate term,”says Swiss refinery group MKS's finance division, “with the Dollar's strength creating a barrier to further gains for the time being.”

Latest data from US regulator the Commodity Futures Trading Commission, delayed until last night by Veteran's Day, showed both speculative and commercial“industry-insider” traders bucking recent trends and reverting to type as the gold and Silver hit new record levels last Tuesday.

Speculative traders raised their bullish bets, while commercial traders grew their net-bearish position.

“At some unknown point, easy money turns into excess leverage, reduced deflation risk becomes inflation fear, fiscal stimulus becomes sovereign credit risk," says J.P.Morgan's asset-allocation group in a recent note, quoted by the Wall Street Journal.

"We can't tell where this turn comes, but history warns us it tends to happen suddenly and violently. As investors, you can't always focus on tail risk, but it makes sense to tilt portfolios toward them."

New data today showed US factory-gate prices falling unexpectedly in October from Sept., while Capacity Utilization was also weak and Industrial Production growth flat.

Over in the UK, new data showed consumer price inflation rising to 3.2% annually in October, forcing Bank of England governor Mervyn King to write an open letter to the government, explaining why inflation is more than one percentage point above his official target once again.

Again, King blames January's VAT tax rise, plus global commodity and UK import prices. Again, he promises to “stand ready to act” - with interest rates still at 0.5% for19 months running, the longest period of inaction since Bank Rate was“thrown in the bin” (as one academic historian put it) for 20 years after the Great Depression at 2.0%.

Again, and despite warning that inflation “is expected to remain above target for a year or so...indeed, [it] may rise further,” King cites “a margin of spare capacity” which will bring inflation back below target “in the medium term”.

Real interest rates for UK savers –after inflation – haven't been this negative since 1978, with the Gold Price in Sterling rising 163% since the Northern Rock banking run of three years ago.

US interest rates, accounting for CPI inflation, have now been sub-zero – meaning a real loss of purchasing power for savers – in 58 months since 2002. The 1970ssaw negative real rates in 61 months in total.

By Adrian Ash

BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

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.


© 2005-2022 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