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 Soars on Global Stock Market Bloodbath

Commodities / Gold and Silver 2011 Aug 19, 2011 - 10:33 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleTHE DOLLAR gold price hit yet another new all-time record late on Friday morning in London, hitting $1876 per ounce – as stock markets around the world continued to plunge.

The gold price then fell 1.6% in less than two hours as US markets opened for business.


Short-dated US Treasury bond prices rose – while those of longer-dated bonds fell – further implying a worldwide flight to safety and liquidity.

Commodities bounced after falling in early trading. European crude oil futures rose while US crude oil futures fell.

Silver prices meantime rose to $42.51 per ounce – 8.8% above where they started the week.

"While gold's latest steep ascent is provoking some talk of a bubble, the reasons for buying gold rather than equities or other commodities are unchanged," said a note from Mitsui Global Precious Metals.

"Risk aversion is likely to persist for as long as world leaders are perceived to be short of ideas for stimulating recovery."

"As long as uncertainty on financial markets remains high," adds a note from Commerzbank, "and the situation does not calm, gold should retain its status as a store of value and the price should continue to climb."

Since the start of August – when the world was gripped by Washington's debt ceiling debate – the US Dollar gold price has shot up 16.2%

US stocks by contrast are down sharply this month, with the S&P down 11.7%.

The Dow Jones Industrial Average meantime has shed 9.5%, falling back below 11,000. Together with the rising gold price, recent selloffs have pushed the Dow to gold price ratio down to its lowest level since 1989.

Bucking the trend for equities on Thursday were gold mining stocks. The Amex Gold Bugs index (ticker symbol: HUI) – which includes the largest producers – closed up 4.5% for the month so far, while the Philadelphia Gold and Silver Index (ticker: XAU) has held steady, showing a 0.3% gain.

The Federal Reserve Bank of Philadelphia's general economic index – a measure of regional manufacturing growth constructed from survey data – has dropped to minus 30.7 this month – its lowest level since March 2009.

"The survey's indicators suggest a decline in demand for manufactured goods, and shipments and employment were also in decline," said a statement from the Philadelphia Fed.

"It seems the sentiment of a double dip recession grows stronger," notes Swiss gold bullion refiner MKS.

 "In past decades...the US has always been in recession when the Philadelphia Fed was -30 or below."

Both indexes, however, remain below their all-time highs, set in April. HUI is 6.3% off its April peak, while XAU is down 4.2%.

Stock markets worldwide continued to tumble on Friday morning. Asian markets sold off hard, with South Korea's Kospi index especially badly hit – closing down 6.2% – despite a temporary suspension of automated program trading.

Major Asian stock markets are all down substantially since the beginning of August:

  • China's Shanghai Composite index has lost 6.2%
  • In Japan, the Nikkei has lost 11.3%
  • Hong Kong's Hang Seng is down 13.5%
  • South Korea's Kospi is down 18.2% since the start of the month

The selloffs continued after European markets opened. By Friday lunchtime losses for August so far were as follows:

  • Loses on the FTSE 100 meantime were 14.1%
  • In Paris, the CAC was down 18.1%
  • Germany's DAX was down 24.5%

"It's a bloodbath out there," the Financial Times quotes one London trader. 

"We haven't seen anything like this since the dark days of the financial crisis."

"The heavy selling is on the back of fears over the state of global economic growth and the ability of European banks to withstand another freezing-over of credit markets," says Ben Potter, strategist at IG Markets.

The Sterling gold price hit a new intraday high of £1138 per ounce – 15.7% up for the month – before falling back.

The Euro gold price also set a new intraday record – €1312 per ounce – before it too fell back.
For August to date, the gold price in Euros is up 16.6%.

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.


© 2005-2022 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