Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Drifts Lower, Stock Markets Nosedive as Crisis Spreads to Italy

Commodities / Gold and Silver 2011 Jul 12, 2011 - 09:19 AM GMT

By: Ben_Traynor

Commodities Best Financial Markets Analysis ArticleDOLLAR gold prices fell to around $1543 an ounce Tuesday morning London time – just below where they ended last week – while stocks and commodities took a beating as concerns grew over Italian sovereign debt.

Silver prices also dropped, falliing below $35 per ounce – 4.6% down for the week so far.


The FTSE Eurofirst 100 index of leading European stocks plunged to €3235 – a 4.4% drop from last week's close – while commodities also took a hit.

Copper futures were down 0.8%, Brent crude oil lost 1.3% and wheat futures were off 2.2% – all by Tuesday lunchtime in London.

The US Dollar Index meantime – which measures the currency's strength against a basket of six other currencies – hit its highest level since the start of April on Tuesday.

Gold prices at Monday afternoon's London Fix saw a clean sweep of record highs in Dollars, Euros and Pounds.

The gold price in Euros was fixed at €1106 per ounce, with the Pound Sterling gold price coming in at £976 per ounce.

"Gold re-affirms its safe haven status," says a gold bullion dealer here in London on Tuesday.

"Very few of the risk factors in the economic and financial environment have been dispelled," adds the latest Precious Metals Monthly report from Standard Bank – which suggests taking advantage "of any bout of weakness" in gold prices to reinforce holdings.

"We'll probably see a lot of support for gold from rising risk aversion due to concerns of escalating debt in Europe," reckons Natalie Robertson, commodities analyst at ANZ Bank.

Government bonds issued by Italy – home of the Eurozone's largest bond market – fell on Tuesday for the seventh day running, pushing the yield on a 10-Year bond up to 5.76%.

"Italy appears on a crisis path," says a note from Bank of America Merrill Lynch.

"At this pace, Italy's borrowing costs could reach levels that would make its debt dynamics unsustainable in a week."

Italy's largest bank, UniCredit, saw trading in its shares suspended on Tuesday after plunging 7% on the Milan stock market.

"Europe needs to recognize it's no longer a crisis of small sovereigns," says Jacques Cailloux, chief Europe economist at Royal Bank of Scotland.

"Italy is still in better shape [than other Eurozone periphery countries]," counters Nobel Prize-winning economist Michael Spence.

"It has a high amount of debt, but it has a high savings in the private sector...it can manage its way through this unless there is a huge attack on the Euro and risks spreads go way up."

On the currency markets the Euro fell against the Dollar to $1.39 on Tuesday morning – a 4% drop since the start of the month.

"Downward pressure is likely to remain on the Euro, reckons Lee Hardman, London-based currency economist at Bank of Tokyo-Mitsubishi, citing investor fears that the Eurozone crisis "is becoming more systemic".

In Brussels meantime, Eurozone ministers indicated Monday evening that they could use the single currency area's €440 billion ad hoc bailout fund – the European Financial Stability Facility – to buy Greek government bonds on the open market. Greek debt is currently trading at around half its face value.

Over in China – the world's second-largest gold market – new lending in June was up 15% compared to the previous month, according to figures published Tuesday by the People's Bank of China.

The PBOC also revealed that foreign exchange reserves grew 30% in the year to June to $3.2 trillion. 

The growth in new lending "suggests more tightening on the horizon," says Joe Lau, economist at Societe Generale in Hong Kong.

"This may be more likely through further reserve ratio hikes."

Taking the first half of 2011 as a whole, however, Chinese new lending actually fell 9.7% compared to the same period a year earlier.

"Worries that China could continue raising rates [could] weigh on [gold prices] in the near-term," says Tom Pawlicki, precious metals and energy analyst at MF Global, citing Saturday's news that inflation rose to 6.4% in June.

The PBOC last week raised its deposit interest rate to 3.5% – the fifth hike since last October.

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 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.


© 2005-2019 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