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
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
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

Gold Price Crash Continues on Forced Selling

Commodities / Articles Oct 23, 2008 - 10:33 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF SPOT GOLD slumped yet again early Thursday as world stock markets sank and the Dollar continued to rise – alongside the Japanese Yen – on the forex market.

Gold's fresh $25 plunge took this week's loss for US investors above 10% at $705.40 an ounce – Spot Gold 's lowest price since mid-Sept. last year.


"People are liquidating gold and other commodities as their losses in stock markets deepen," said one Tokyo research analyst to Bloomberg this morning.

Hedge funds worldwide – a key source of leveraged speculation in Gold Futures between 2003 and '07 – "lost 4.6% of their value in September," reports the London Times , "the biggest monthly fall since data began in 2000."

Today the Kospi index of South Korean equities lost 7% in frantic trade, while the FTSE100 index of UK shares dropped through 4,000 for the third time this month – a level last seen in mid-2003.

Lead, copper and nickel prices fell by 7% at the London Metal Exchange (LME) this morning. Crude oil added a dollar to $68 per barrel.

"The global credit crunch has been the Dollar's salvation," notes Steven Barrow at Standard Bank in a note to clients.

"When blind panic grips a market – as it has done since Lehman Brothers collapsed – all anyone worries about is ditching positions and returning to the safety of cash.

"The fact that most of these positions seem to have been short of dollars – along with many short-Yen positions – has caused this huge Dollar surge."

The US currency today pushed the Euro back to Wednesday's two-year lows at $1.2750. The Yen hasn't been this strong against the Euro since the end of 2002.

The Japanese currency has now regained half of the 45% drop it suffered between Sept. 2000 and July '08 in the last 12 weeks alone.

Today the Gold Price in Japanese Yen – which fell through ¥3,000 per gram at the start of Oct. – took this week's losses above 15%, finally bouncing off a new two-year low.

On the economic front, Japan's balance of trade in goods sank 71% last month compared with Sept. '07. Consumer electronics giant Sony today slashed its earnings forecast for the year-to-March '09 by more than one-half.

New industrial orders in the 15-nation Eurozone sank almost 7% in August from the same month last year, the official data agency said this morning.

Europe's net trade balance sank to minus €8.4 billion ($10.8bn).

The Swedish Riksbank today slashed its key interest rate by 0.5% – the second such cut this month – after slashing its 2009 growth forecast to just 0.1%.

"Gold has fallen below the psychological $750 support and below the technical support at $730," notes Mitsui in London. "Physical demand remains strong, and you can expect this to continue in the short term.

"[But] the market feels heavy...and one has to wonder if there is long-term value in sub-$700 gold?"

Speaking to Bloomberg last night, "I think physical gold will go down some more, but as an insurance policy I'd be very happy if it went down first, allowing us to buy more," said Marc Faber – former head of Drexel Burnham Lambert in Hong Kong and now, besides running private-client portfolios from his base in Thailand, editor of the widely respected Gloom, Boom & Doom Report .

Compared with industrial commodities, "Gold has held up relatively well," says Faber – "and it has held up relatively well compared with equities."

Looking ahead, "I think that the governments in this world have no other option than to print money, and that will lead down the road to inflation."

Gold Prices fell sharply against all major currencies on Thursday, however, dropping to £434.75 an ounce for British investors and sliding to €550.80 for French, German and Italian buyers.

Trading down at those five-week lows, gold has dropped more than a fifth of its value for European investors since hitting new all-time highs on Oct. 10th.

Meantime in India – destination for one ounce in every five of global gold mining supply in 2007 – "demand is strong but not as strong as it should be at this time," said Haresh Acharya, a bullion dealer at Parker Agrochem Exports in Ahmedabad, to Reuters earlier.

Next Tuesday will mark the key gold-buying festival of Diwali. "But this Diwali is as good as dead for gold demand," says Daman Prakash Rathod, director of MNC Bullion in Chennai, in an email to BullionVault">BullionVault.

"August 2008 was very good indeed...but this Diwali consumers are spending more on clothing and other utilities."

"People are not willing to fall victim to high Gold Prices and are instead going for glittering imitations," agrees Roli Malhotra, marketing chief at the Sia Lifestyles fashion chain based in Mumbai, speaking to the Business Standard today.

"Sales of imitation bridal [jewelry] sets are on the rise," he says, even as Indian Gold Prices fall below the previously key resistance level of 12,000 Rupees per 10 grams.

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