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 Up, Silver Down as Soaring Oil & Bond-Market Rates Snub Geithner's "No Stagflation" Claim

Commodities / Gold and Silver 2011 Feb 24, 2011 - 10:29 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose further in London trade Thursday morning, hitting new 2011 highs for Dollar investors as Brent crude oil jumped to $119 per barrel and a raft of economic analysis warned of "stagflation" ahead for the global economy.

Silver prices ticked lower together with platinum and palladium – which also find the bulk of their demand from industry, rather than investment or jewelry – as well as base metals.


New estimates said oil output from Libya has fallen by two-thirds since unrest first spilled into rebellion against Colonel Gaddafi's regime a week ago. Saudi Arabia offered to match failed supplies from Africa's 3rd largest producer.

British prime minister David Cameron apologized for failing to evacuate UK citizens more quickly from what one national called the "mass hysteria" of 10,000 foreigners trying to fly out of Tripoli airport.

German magazine Spiegel said Berlin has sent three warships carrying 600 soldiers towards Libya's coast.
 
"This move in gold right now is acutely about the Middle East," reckons James Dailey, portfolio manager at the $125 million private-client firm Team Asset Strategy in Indianapolis.

"The trade is about fear but people are viewing it as an extension of the inflation trade."

"If unrest spreads even further afield or becomes more violent, gold will benefit further as a safe haven," says Darren Heathcote, head of trading at Investec Australia, also speaking to Reuters.

Friday has been deemed a "Day of Rage" against Israeli settlement of the West Bank by opposition Palestinian politicians. The same phrase is being used to call for protests in Saudi capital Riyadh on March 11th.

"The oil market cannot accommodate another disruption in our view, with the problems in Libya potentially absorbing half of Opec's spare capacity," says Goldman Sachs analyst Jeffrey Currie in a note.

World stock markets meantime fell for the fifth day running on Thursday.

The "break-even" inflation rate implied by index-linked US Treasury bonds pushed upwards again, reaching its highest level since July 2008.

"A detailed scrutiny reveals that the move follows a stagflation concern" says Bank of America analysis of the US Treasury bond market, noting that real interest rates – accounting for that rising expectation for inflation – have in fact fallen.

"In fact," says James Zhang at Standard Bank today, "the probability the futures market assigns to a [US] rate hike by year-end has declined in recent weeks, from 36.8% at the start of January, to only 25% yesterday.

"We read [that] decline in probability as concern over growth...[Even] putting Middle East risks aside, the rapidly declining real interest rate is bullish for the gold price."

Food prices have sunk this week from new recod highs as energy costs have jumped, with Chicago wheat contracts losing 10% by the end of Wednesday's trade.

"The economy is in a much stronger position to handle" rising energy prices, claimed US Treasury secretary Timothy Geithner at a Bloomberg event yesterday.

"Central banks have a lot of experience in managing these things."

Back in the gold market, "The closest resistance is at January high 1423 followed by record high 1431," notes Scotia Mocatta.

Precious metal prices "again diverged on Wednesday" says another wholesale dealer, with industrial metals platinum and palladium both falling as gold and silver rose.

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 2011

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