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
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Tokyo Gold Breaks 25-Year High on Fannie-Freddie Bail Out

Commodities / Gold & Silver Jul 14, 2008 - 09:35 AM GMT

By: Adrian_Ash

Commodities THE SPOT PRICE OF GOLD slipped 1% against the US Dollar at the London opening on Monday, giving back one-third of Friday's $23 surge as crude oil dropped and government bond prices fell.

Credit spreads – a measure of investor concern over the risk of default – also ticked lower after Sunday's promise of unlimited tax-funded support for Freddie Mac and Fannie Mae, the $5 trillion US mortgage companies, from the Treasury in Washington .


European stock markets meantime rallied for only the fourth time this month, buoyed by the first big takeover stories since J.P.Morgan bought Bear Stearns in March.

Over in Tokyo , Japanese gold futures touched a 25-year high of ¥3,340 per gram, closing 0.8% higher as the Nikkei stock index slipped to a three-month low.

"The fact that Gold broke through with such gusto [on Friday] suggests that we may now see the development of a longer term trend, rather than a return to the range of the past 3 months," say Stephen Malyon and Sacha Tihanyi for Scotia Mocatta here in London .

"However, with such heavy upside price action over the past two days, it is not inconceivable that we may face a slight pause before moving higher. Primary resistance now lies at 980."

On the data front this morning, the United Kingdom reported a fresh all-time record for inflation in Producer Prices during June, with input prices rising 30.0% and output prices breaching double-digits year-on-year.

Tuesday brings the latest Producer Price inflation data from the United States , with Consumer Price inflation due on Wednesday.

Today the Eurostat data agency said Industrial Production in the 16-member Eurozone shrank 1.9% in May from April.

The People's Bank of China meantime reported a surge in its foreign currency reserves, up by 35% in the year-to-June to $1.81 trillion.

"A huge amount of money is coming into China and betting on the Chinese currency, the Yuan, being revalued higher," says Dwyfor Evans, an economist in Hong Kong for State Street Global Markets.

"This is creating an inflation impact and has become a big worry for policy makers."

Latest data point to a "short squeeze" in Gold futures in the week ending last Tuesday. Overall, the total volume of open contracts grew 2.1%, but the largest move came in the long position of commercial traders – those miners, refineries and bullion dealers whose very business usually makes them aggressive sellers of gold.

Speculative gold traders, in contrast, grew both their short and long positions in equal measure, says the Commitment of Traders report.

Trading in crude oil futures – now subject to political wrangling and lobbying in the United States – showed a similar pattern. Commercial traders re-opened one-third of the long contracts they'd closed since mid-June, while hedge funds and other large speculators in fact cut their bullish position by 3.5%.

Smaller private investors closed one in six of their bullish contracts, just before crude oil futures hit a series of new all-time records up to $147 per barrel.

"With respect to oil," writes Manqoba Madinane at Standard Bank in Johannesburg this morning, "we note that US Dept. of Energy statistics show gasoline demand completed an 11th consecutive week-on-week decline last week, retreating by 3.9%.

"This reveals evidence of demand destruction in the world's biggest crude oil consumer. If oil corrects this week, this could subdue precious metals investment fund flows.

"[But] the equities market is ever more stressed. The Dow has now clocked a 16.32% year-to-date loss, with European equities performing even worse. Commodities should continue to benefit from equities' suffering."

Today Bloomberg News says 18 out of 25 professional traders and analysts it surveyed around the world at the end of last week believe Gold Prices will continue to rise between now and Friday.

Five advised selling Gold . The last two were neutral.

"Once again there is almost a perfect storm brewing," says today's note from Mitsui, the precious metals dealer in London .

Citing "weak US Dollar, firm crude & smoldering geopolitical tensions," it believes "there is a good chance we'll see $1,000 tested in the short term...It wouldn't be surprising to see speculative interest in high strike calls start to increase."

Besides the paper promises of gold futures & options, last week also saw a surge in holdings at the world's exchange-traded gold funds ( Gold ETFs ).

The GLD fund traded in New York added 47.52 tonnes, notes the latest Got Gold report at Resource Investor, "the largest one-week increase in metal holdings since GLD's inception in Nov. 2004.

"It easily tops the second largest weekly increase of 39.62 tonnes set the week of 23-27 Jan. 2006, with gold then trading in the $560s."

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