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 Rallies as Dollar and Yen Correct

Commodities / Gold & Silver Oct 28, 2008 - 12:48 PM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD BULLION continued to rally on Tuesday, rising to a four-session high above $752 per ounce as world stock markets also bounced after falling 12 times in 19 days in October.


Government bonds fell fast as money moved back into equities, pushing the yield offered by 10-year US Treasuries ten basis-points higher to 3.79%.

Consumer-price inflation in the United States was last pegged at 4.9% annually.

US crude oil futures also turned higher early Tuesday, bouncing 2.4% from yesterday's 15-month low to $64.75 per barrel. Food stuffs and base metals jumped alongside, led by an 11% gain in nickel.

Both the Strong US Dollar and Japanese Yen meantime slipped back on the currency markets, dropping 1.5% and 3.5% respectively vs. the Euro.

"Today is Diwali , the Indian festival of lights," notes the London team at precious-metals dealer Mitsui, "and leading up to this festival, physical gold demand in India is quite strong.

"The difference this year is that this time there has been reports of strong demand across the globe, and given this insatiable appetite for Gold , it's no wonder prices have recovered to the $750 area.

"Expect this demand to slow if Gold approaches $800 per troy ounce," advises Mitsui, but "with another round of interest rate decisions in the US later this week, gold could find fresh legs to travel higher."

The Fed's dramatic rate cuts starting in Sept. '07 saw the Gold Price leap from $650 an ounce above $1,030 by mid-March.

Today the Central Bank of Iceland hiked its key lending rate from 12% to 18% in a bid to stall the collapse of its currency – now worth two-fifths less on the forex market than at the start of '08 – as part of the measures demanded by the International Monetary Fund (IMF).

With a total of $200 billion in reserves, the IMF has now committed one-quarter to aiding Iceland, Ukraine, Pakistan, Hungary, Belarus and Serbia.

"When you tot up the countries across the [East European & Baltic] region with external funding needs," says Neil Schering, an emerging markets strategist at Capital Economics in London, "you get to $500bn or $600bn very quickly – and that blows the IMF out of the water.

"The Fund may soon have to start calling on the West for additional funds."

This morning the Bank of England said it believes the total losses to private banks as a result of the global solvency crisis could total $2.8 trillion total losses.

The IMF forecast $945 billion this spring. Ben Bernanke – chairman of the US Federal Reserve – began the bidding in July last year at $100 billion.

"Intervention is needed in the Japanese Yen," says Steven Barrow at Standard Bank here in London, "not because it might help stabilize Japan's stock market, or because it might stem the plunge in its trade balance.

"Instead, Yen Intervention is needed in order to slow down the global de-leveraging and mass position-unwinding that's going on right now."

Global credit markets remain closed to Latin American infrastructure projects, reports Latin Finance , with Barclays Capital advising clients that while individuals countries may remain strong, "evaluating vulnerability a complicated task."

Yesterday the government of Austria was forced to cancel a new auction of sovereign bonds due to lack of demand – the third such delay to hit European states so far this month.

New finance has also dried up for mining companies worldwide, reports Martin Creamer in his Mining Weekly , knocking London's largest mineral groups 44% lower on the stock market since end-June.

Most telling for future Gold Mining Output , the top 20 junior mining stocks listed on London's Alternative Investment Market (AIM) dropped more than 50% of their value between July and Oct.

No fresh funds were raised by new issues of AIM mining shares, and secondary issues raised just £6.1 million ($9.5m) in September.

"In just three months, the value of Aim's mining universe has more than halved," notes Dr.Tim Williams, director of mining-and-metals analysis at Ernst & Young. "Access to new capital for those without great projects, is, at least for the time being, closed."

For many junior exploration firms, Dr.Williams says, the situation is now "nearing critical".

Last night the head of South Africa's Harmony Gold – the world's fifth largest gold miner by ounces – said he's no longer looking to expand via early-stage projects, but rather through buying already-productive mines.

"Probably 12 months ago we were looking at exploration properties and early projects," said the CEO, Graham Briggs, to MiningMX.com . "Now we're looking more towards the production side of things."

Gold Mining production worldwide fell 6% during the first-half of the year compared with H1 2007, the World Gold Council said Monday.

Totaling just 590 tonnes between April and July, global gold mining output was the lowest since 1996 according to data from the US Geological Survey.

The Spot Gold Price in US Dollars has more than doubled since world gold mining production peaked in 2003.

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