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 Bond Yields Go to Zero

Commodities / Gold & Silver Dec 10, 2008 - 08:17 AM GMT

By: Adrian_Ash

Commodities
THE PRICE OF GOLD
rose steadily throughout early London trade Wednesday, reaching a one-week high above $792 per ounce as strong gains in Asian equities faded on Europe's bourses.

As the Wall Street opening drew near, the FTSE100 index stood just 0.3% higher, while the Gold Price in Sterling reached £534 an ounce, almost 3% above Tuesday's low.


The Gold Price in Euros broke up to €612 an ounce, its best level so far this week, while the single currency slipped back from a 10-session high vs. the Dollar above $1.3000.

"Banks and brokers globally are now well capitalized," says Walter de Wet in his Gold note for Standard Bank in Johannesburg today, "with total capital raised exceeding total write-downs by $41 billion.

"[But] we doubt that credit fears have subsided for good."

Here in London, today's Telegraph newspaper reports that UK banks – now part-nationalized by the socialist Labour government – will need fresh tax-payer funds if they are to deliver both greater lending to households and business as well as the improved "core capital" ratios demanded by City watchdog the Financial Services Authority (FSA).

The Financial Times says UK chancellor Alistair Darling may extend tax-funded guarantees to business loans and credit in a bid to revive corporate lending.

"Banks are being asked to lend significantly more without fully pricing in the risks," says Simon Ward, economist at the ailing New Star investment group.

"That puts their capital positions in jeopardy and may mean they need a further capital injection in a year or two."

Across the Atlantic in Washington, a Congressional vote is now widely expected on a $15 billion rescue of the "Big Three" US car makers.

Global auto sales are predicted to end 2009 more than 8% below last year's levels according to new research from the Global Insight consultancy.

A report in the Wall Street Journal says insurance giant American International Group (AIG) owes $10 billion on failed trades that are not covered by the US government's $150bn bail-out.

World mining megalith Rio Tinto said today it will slash jobs by more than one-in-eight as demand for base metals collapses. November saw China record its first year-on-year drop in exports – down 17% from the same month in 2007 – for the first time since 2001, new figures show.

Yesterday the yield paid to buyers of 3-month US Treasury bonds turned negative as the price of these so-called "safe havens" surged yet again, offering a 68-year low of minus 0.01%.

"The futures market is pricing in a 98% probability of 75 basis-points cut by the Fed next Tuesday to 0.25%," continues De Wet at Standard Bank. "We believe other central banks will follow."

But while Negative Real Interest Rates Drive Investors to Gold , low crude oil prices – holding below $44 per barrel on Wednesday – offer "little support.

"In fact," says De Wet, "crude oil might test yet lower levels towards year-end."

Gold Futures traded in Tokyo meantime rose 1.8% today, even as the Japanese Yen reversed an early dip on the currency market.

The Nikkei stock index added 3.5%, reaching its best close in three week, despite news of a shocking fall in machinery orders (down 4.4% in Oct. from Sept.) and a sharp decline in corporate goods prices (down 1.4% month-on-month).

"The precious metals are creeping higher," says the precious metals team at Mitsui in London, "but from a technical perspective we are in the middle of a consolidation phase.

"Gold is range-bound between $740-830."

On the other side of the trade, meantime, shares in Canadian Gold Mining firm Gabriel Resources fell to an all-time low on Tuesday – down by four-fifths since Jan. '07 – after a Romanian court cancelled a key license at its much-delayed Rosia Montana project.

Scarred by streams of toxic run-off since it was first mined in Roman times, the "Red Mountain" – Europe's largest gold deposit – is estimated to hold 14.6 million ounces of gold.

The high-profile blocking campaign – part-funded by Hungarian hedge-fund legend George Soros and fronted by English actress Vanessa Redgrave – yesterday won the annulment of an "archeological discharge certificate", without which Gabriel cannot disturb the historic site.

The court's decision "is final, is not appealable" said the judge.

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