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
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
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Jumps as US Dollar Sinks on Inflation Data

Commodities / Gold & Silver Apr 16, 2008 - 11:52 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE OF GOLD jumped to a three-week high early Wednesday after European and US inflation data sent traders scurrying for hard assets and the Euro single currency shot to new record highs vs. the Dollar.


Rising at 3.6% year-on-year in March – the fastest rate since the single currency was launched in 1999 and a multi-year high for French, German and Italian consumers – Eurozone inflation has now spent 52 of the last 70 months above the European Central Bank's target of 2.0%.

Crude oil broke new all-time highs this morning above $114 per barrel.

Today's Consumer Price data from the Dept. of Labor then showed the US cost of living rising 4.3% from March 2007, completing the longest run of plus-four per cent inflation in 16 years.

"Inflation is going up everywhere [and] Gold will gain from that," said a London trader to Reuters earlier.

The spot Gold Market rose 2.1% from its overnight low of $925 to reach its best Dollar-level since March 28th at $945 per ounce as Wall Street opened for business.

The Dollar dropped towards ¥100 and $1.98 per Pound, while the Euro shot to $1.5965 – almost two cents up for the session so far – as traders bet the ECB cannot cut its interest rates anytime soon.

Food prices across the 15-nation Eurozone rose 6.2% from March last year, the EuroStat agency said today.

But in Italy – where the International Monetary Fund (IMF) now predicts economic growth of just 0.3% in both 2008 and 2009 – the newly returning prime minister, Silvio Berlusconi, says he will force rate cuts by joining forces with French president Nicholas Sarkozy, a long-time critic of ECB policy.

"A very strong Euro is hurting Italy 's economy," said Berlusconi late Tuesday. "I will discuss intervening with the ECB with Sarkozy."

The ECB has already retaliated, with policy-maker Jurgen Stark saying "I would recommend to political leaders in Europe, newly elected and re-elected, to read the European law on the ECB [independence]."

Former chief economist at the central bank Otmar Issing also says the ECB is certain to fight this "intolerable" rate of inflation.

"Oil prices have reached record levels and the Dollar's hit a record against the Euro," notes Suki Cooper at Barclays Capital in London .

"There is a lot of inflationary concern [and that] remains very positive for Gold Prices ."

In the broader markets today Wall Street stock futures pointed higher despite a 50% drop in first-quarter earnings from J.P.Morgan – the third largest US bank.

European equities held onto a 1% gain while government bond prices fell, pushing open-market interest rates four basis points higher to 3.54% on the two-year German bund.

The rate of return offered by Italian bonds has risen steadily since Berlusconi was returned to power at the weekend, moving in line with the Eurozone's weakest major economy, Greece .

Yet analysts including Stuart Bennett – senior Euro strategist at Calyon in London – still believe that Eurozone inflation "will moderate" without any change in ECB policy, enabling the central bank to cut rates and tackle the on-going banking crisis later in 2008.

The Gold Price in Euros today moved above €592 per ounce, its highest level so far this April.

For British consumers now suffering their worst fall in Sterling exchange rates since the house-price crash of 1989-1992, the price of Gold rose to a one-month high above £478.

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