Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Stocks Gain on China's $586 billion Economic Stimulus Package

Commodities / Gold & Silver Nov 10, 2008 - 08:31 AM GMT

By: Adrian_Ash

Commodities SPOT GOLD PRICES rose sharply during Asian and early London trade on Monday, adding 2.4% from last week's close as world stock markets also rose on news of a 4 trillion Yuan stimulus package ($586bn) from the Chinese government, plus an extra $40bn of US government aid for troubled insurance giant AIG.


"Although this stimulus package is a large amount of money, it constitutes only 2.3% of Chinese GDP," notes Walter de Wet at Standard Bank in his Gold Market note today.

"Spread over two years it is 1.15% of GDP per year. [So] while the package is a positive development, it is unlikely to be a quick fix for slowing growth."

China's Shanghai & Shenzen stock market closed the day 7.3% higher and Japan's Nikkei index added nearly 6%.

The central bank of Taiwan cut its key lending rate for the fourth time in two months.

The Reserve Bank of Australia – which has slashed its rates from 7.25% to 5.25% in the last eight weeks – today vowed "to avoid an unduly sharp weakening in demand" as it cut its 2009 growth forecast by one third.

AIG's latest dollop of US Treasury cash – offered in return for partial ownership – takes the insurance giant's government aid so far to a total of $150bn according to Reuters' math.

"Gold is boosted by the outlook that all these money injections by governments will sooner or later come into the market," said Ronald Leung, head of Hong Kong's Lee Cheong Gold Dealers, to Reuters this morning.

"Gold will go up, because it is the only money you can trust," agrees Michael Martin of the R.F.Lafferty brokerage in New York.

Tokyo Gold Futures added 2.9%, while the Japanese Yen – which had leapt by almost one-half since mid-July on the currency markets as the " Carry Trade " went into reverse – slipped 2.5% to ¥99.30 per Dollar.

The Euro gained 2¢ to the Dollar, capping the gains in Gold Prices for Eurozone investors at 1.4%.

Crude oil also rose sharply this morning, adding 6% to $64.50 per barrel after Chakib Khelil – president of the Opec oil carel – said that "if the price does not reach our objective of $70 to $90 per barrel, there will probably be another cutback [in output]."

Government bonds, in contrast, slipped back after last week's jump. The yield on 10-year US Treasuries rose four basis points to 3.83%.

"Focus on the front-end of the yield curve," advises Bill Gross, head of Pimco – the world's largest bond fund.

"The Fed will stay low for an extended period of time while the inevitable inflationary pressures of government bailouts lay further out on the yield curve."

This week the US Treasury Dept. will issue $55 billion of new debt in its regular quarterly funding drive – more than three times the volume of new debt issued in Nov. 2007.

"Gold is still range bound at $720-760," reckons the latest note from Mitsui, the London-based precious metals dealer, "as reflected by the sharply lower volatility at the end of last week.

"A period of consolidation may begin to attract investment back to these markets that have been well supported by physical demand in recent weeks."

Latest data from the US commodity futures regulator showed the total number of outstanding Gold Futures contracts shrank yet again last week, contracting by 2.1% to a 14-month low of 470,700.

Hedge funds and other "large speculators" grew their bullish betting for the first week in seven. A 29% jump in their bearish bets on the Gold Price , however, drove their net position to its least bullish since Sept.'s 15-month low at 69.9%.

Over in the retail Gold Market of India, meantime – destination for one ounce in every five sold worldwide last year – consumers are "buying with both hands" reports Daman Prakash Rathod, director of MNC Bullion in Chennai, in an email to BullionVault this morning.

"With Gold Prices below $750 and the Dollar exchange rate to Rupees below Rs. 48," he explains, "huge demand has erupted in the last five days, driving premiums charged for physical gold sky high.

"Almost every physical wholesaler is busy day and night."

Thanks to a good harvest this year, Rathod continues, "the money crunch so widely talked about elsewhere in the world is only urban gossip here. Rural farmers are buying the maximum gold [they can get] in India to store their savings."

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

© 2005-2022 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