Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Recovers and Stocks Bounce Ahead of US Interest Rate Cut

Commodities / Gold & Silver Mar 18, 2008 - 11:01 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES ticked higher vs. both the Dollar and Euros in London on Tuesday, gaining more than 1.3% from an overnight dip against each currency as global stock markets bounced after Monday's shock losses.

By lunchtime in London – where the AM Gold Fix was set nearly $20 below Monday's record of $1,023.50 per ounce – the MSCI World Index stood 0.9% higher to show its first gain since Wednesday last week.


The Dax index of blue-chip German stocks reclaimed 160 of Monday's 269-point loss, while Wall Street futures turned higher on news that Goldman Sachs – the world's biggest investment bank – saw earnings fall by one half but still beat analyst forecasts in the three months ending Feb. 29th.

Lehman Bros. saw net earnings fall by 59% over that period, it said today. The bank is widely rumored to face a similar cash shortage to Bear Stearns before its $2 per share fire-sale on Sunday.

"Everyone wants to know how bad it's going to get," says Glenn Marci at DZ Bank in Frankfurt . "Will banks recover this year or will the crisis stay with us for longer?"

"I wouldn't be that surprised if [the Federal Reserve] went for a 100-basis points cut."

Ahead of the Fed's latest interest-rate announcement – due out 14:15 EST today – crude oil recovered $1.50 of Monday's $4.50 plunge to reach $107.56 per barrel, while the US Dollar held steady near yesterday's new record lows on the currency market.

Base metals led by nickel bounced from yesterday's multi-year record falls, but grain prices continued to slip away from their historic highs of early 2008.

"The worst is yet to come" in soft commodities, reckons Hiroyuki Kikukawa at IDO Securities in Tokyo . "People want out of all markets and will try to keep cash in their hands for now."

Gold was the only hard asset not to lose value against the US Dollar on Monday, ending the session 0.3% higher in New York . Amid the panic in bonds and stocks, Gold beat silver (down 1.9%), platinum (down almost 3%) and crude oil (down 4.1%).

The UBS-Bloomberg index of commodity prices sank by 4.5% yesterday, the sharpest fall in its 11-year history.

"[But] the Fed is eager to save the economy at any price, even inflationary pressure, and that is favorable for commodities," says Eugen Weinberg at Commerzbank in Frankfurt .

"If we have a cut of one point you'll see another spike in commodities."

A survey of 101 professional economists by Bloomberg News puts the median forecast for today's US Fed rate-cut – due out 14:15 EST – at 0.75%. Anything bigger would be the sharpest cut since 1984.

The prime minister of China , Wen Jiabao, said today he is "deeply worried" by both the US slowdown and its fast-sinking US currency.

"Global economic developments cannot but have an impact on China," Wen said at the close of the annual National People's Conference, adding that he's concerned about "when the US Dollar might reach bottom and what kind of [monetary] policy the US would adopt [from here]."

An un-named "authoritative institution" says $461 billion of hot money poured into China from overseas speculators in 2007, according to China Daily , pushing the nation's foreign reserves to $1.53 trillion.

Premier Wen today admitted that China will struggle to cap consumer-price inflation below his target of 4.8% in 2008. Last month inflation reached 8.7% year-on-year.

The United Kingdom today reported consumer price inflation rising at the fastest pace since May last year at 2.5% in Feb. The more trusted Retail Price measure rose 4.1% year-on-year, and the rising pace of inflation – threatening the need for higher interest rates from the Bank of England – helped push the Pound higher from Monday's 12-year lows vs. the Euro and Japanese Yen.

It also capped the Gold Price in Sterling just below £500 per ounce.

"People are looking for some kind of port in the storm," reckons Simon Weeks at Scotia Mocatta, the precious metals dealer.

"I would expect the Gold Market will outperform the other metals as people look for a safe haven. Excess cash is not going into anything speculative."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
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 2008

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.

Adrian Ash Archive

© 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