Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Negative Forecast Remains

Commodities / Gold and Silver 2012 Jun 26, 2012 - 07:13 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleSPOT MARKET prices to buy gold traded just above $1580 an ounce throughout Tuesday morning's London session, up around 0.6% on last week's close following gains the previous day.

Prices to buy silver traded in a tight range around $27.50 an ounce – 2.1% up on the week so far.
"After last week's bearish price action it is hard to get excited about a sustained rally [for gold]," says the latest note from technical analysts at bullion bank Scotia Mocatta.


"In our opinion," adds Commerzbank senior technical analyst Axel Rudolph, "gold has resumed its downtrend...we will retain this negative forecast while the gold price trades below the current June high at $1641."

European stock markets meantime edged slightly higher by lunchtime in London – following losses the previous day – while commodities were broadly flat and US Treasury bonds fell, as markets continued to focus on upcoming policy discussions in Europe.

On the currency markets, the Euro struggled to stay above $1.25 this morning, having fallen from one-month highs last week.

"If the US Dollar remains strong, then gold may easily move down a little bit," says one bullion dealer in Hong Kong.

"Sentiment in general is a bit mixed. If you have less money in your pocket, why should you buy gold? The only thing that people are buying for the time being is the US Dollar."

The European Council – which according to its website "defines the general political direction and priorities of the European Union" – has called for "greater pooling of decision making on budgets" across the Eurozone, ahead of the EU summit which starts this Thursday and concludes Friday.

"A fully-fledged fiscal union," it says in a report issued Monday, "would [ultimately] imply...the development at the Euro area level of a fiscal body, such as a treasury office."

The report, which is expected to form the basis for discussions at this week's summit, outlines "four essential building blocks" for greater European integration. As well as integrated budget setting, it calls for an "integrated financial framework" – including cross-border deposit insurance and bank resolution schemes – an "integrated economic policy framework" and stronger "democratic legitimacy and accountability".

The report also suggests the issuance of common debt instruments such as so-called Eurobonds "could be explored...in a medium term perspective".

"Steps towards the introduction of joint and several sovereign liabilities could be considered," the report says, "as long as a robust framework for budgetary discipline and competitiveness is in place."

German chancellor Angela Merkel yesterday described Eurobonds as "economically wrong and counterproductive".

"There is now a growing suspicion that Germany is simply not ready to accept the level of debt mutualization necessary to restore confidence and keep the single currency project alive," says Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy specializing in sovereign credit risk.

Cyprus became the fifth Eurozone nation to apply for a bailout Monday, following a decision by ratings agency Fitch to cut the country's credit rating to junk status. The Cypriot government aims to contain "spillover effects" from the Greek economy, to which Cypriot banks have "large exposure", an official statement said.

Over in Athens, Greece's new finance minister Vassilios Rapanos has resigned four days into his appointment, after he collapsed and was hospitalized Friday.

Ratings agency Moody's meantime has downgraded 28 Spanish banks, including Santander, following its decision earlier this month to cut Spain's sovereign rating to one notch above junk.

Over in India meantime, the Rupee continued to trade near all-time lows against the Dollar on Tuesday, despite moves a day earlier by the Reserve Bank of India aimed at boosting capital inflows, such as raising the limit for the amount of government bonds foreign investors can hold.

"These are just stop-gap arrangement," says Sonal Varma, economist at Nomura in Mumbai.

"What has the government done to reduce the fiscal deficit and curb the current-account deficit?"

"The major issues in India," adds Benoit Anne, managing director at Societe Generale in London, are the question marks about growth in the context of China being heavily scrutinized on the same topic, as well as the credibility of economic and financial policies."

Raising the amount of Indian government bonds foreigners can hold "is not a guarantee that foreign investors will rush in," Anne adds, "especially if the fundamental problems have not been addressed."

Rupee prices to buy gold have hit a series of record highs this month, as the Indian currency has fallen against the Dollar.

"For the past two to three months, there has been virtually no gold buying in India," says Krishna Kumar Nathani, managing director of Chennai-based consultancy Indiabullion.com.

"But if international prices were to retreat and the Dollar-Rupee holds at current levels, then I expect demand to pick up again."

"If we have good monsoon rains," adds Bombay Bullion Association President Prithviraj Kothari, "then gold demand could be anywhere between 750 and 800 metric tonnes this year."

India was the world's biggest gold buyer in 2011, with total Gold Bullion demand totaling 933.4 tonnes according to World Gold Council data. Gold demand in the first quarter of 2012 however was 207.6 tonnes, down 29% on the same period last year, with China overtaking India as the world number one for the second quarter running.

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 2012

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