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
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
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Daily London Gold Market Report - Gold Rallies Whilst Stocks Fall

Commodities / Gold & Silver Jul 11, 2007 - 08:54 AM GMT

By: Adrian_Ash

Commodities

OLD TRADED $2 above Tuesday's US close in the first-half of London trade on Wednesday, approaching lunchtime just shy of $666 per ounce.

Aside from growing demand for investment gold, "additional buying in gold also comes from the strong support around the $650 level," said Pradeep Unni at Vision Commodity Services in Dubai to Reuters earlier.

"Every time gold slips below $650, physical demand [for jewelry fabrication] is seen to creep in. This has been a trend for the last four months."


"The future tone is strong," agrees Yukuji Sonoda, precious metals analyst at Daiichi in Tokyo . "$650 is the bottom price."

This morning's move in gold prices came even as global stock markets sold off – breaking the pattern of gold moving in lock-step with equities seen so far in 2007, and following on from yesterday's 148-point loss in the Dow Jones index on Wall Street.

After Home Depot, the world's largest home-improvement store, forecast an 18% drop in earnings per share, Standard & Poor's warned it may cut the credit ratings awarded to $12 billion of subprime mortgage-backed bonds. Just before the US close, Moody's Investors Service downgraded its ratings on $5.2 billion in mortgage-related debt.

The slump in US consumer spending and house prices hurt the Nikkei in Tokyo today. The index lost 1.1%, led lower by insurance and export stocks, as the Japanese Yen rose on the currency markets.

"It boils down to a fall in US stocks and the stronger Yen," reckons Tsuyoshi Nomaguchi, a strategist at Daiwa. "The market is now watching for a rebound in the US market because that would also bring back the Dollar."

In London , the FTSE100 index stood 0.6% lower by late morning. "It has the taste of what we saw in 1998 with the bond crisis," according to Tom Hougaard, chief market strategist at margin-brokers City Index. "With these subprime mortgage lenders, we are going to be in for a volatile summer."

Government bond prices continued to rise in anticipation that the US Federal Reserve will act quickly to cut Dollar interest rates, bailing out the subprime mortgage sector. The yield on 10-year US Treasury bonds dipped to 4.99%, its lowest level in a week and 19 points lower since Monday. Ten-year German bund yields dropped 5 points to 4.53%.

Energy prices continued to rise, however, even as interest rates fell in the markets. Brent crude oil broke above $76 per barrel late on Tuesday, a new 11-month high, as US gasoline prices rose on news of forced refinery shutdowns in Texas, Kansa and now Indiana.

Speculative long positions in crude oil futures are now at an all-time high, according to Barclays Capital. Net-long positions rose by 43% in the week ending July 3rd.

Back in the gold market, the initial move in Dollar prices today was matched by the Sterling price of gold, up 0.5% overnight. But for British investors gold then pulled back to reach lunchtime near yesterday's lows below £327.50 per ounce as the Pound rose to a fresh quarter-century high against the US Dollar above $2.0300.

French and German investors found the Euro price of gold trading €3 per ounce below the week's high at €483.50 as the Euro rose above $1.3770. The Dax index of German stocks, heavily dependent on manufacturing exports, dropped 1.8% to hit a three-week low despite assurances from the Jürgen Stark, an executive member of the European Central Bank, that the Euro's current strength reflects strong economic growth. It remains within a range seen before the launch of the Euro as a convertible currency in 1999, he said.

Today's fresh slump in the Dollar followed a long, dry speech by Ben Bernanke, chairman of the US Federal Reserve, last night. Rather than addressing the fact that 18 of the world's top 20 central banks are now presiding over double-digit growth in their money supply – and making no mention of the collapse in subprime mortgage-backed assets, Dr.Bernanke spoke about anchoring "inflation expectations". He also noted how his predecessor, Paul Volcker, restrained the US public's long-term inflation expectations – in turn tempering the actual rate of inflation by curbing wage demands and speculation – by raising the Fed's rate of interest.

With bond yields now falling as energy prices increase yet again, might "strong medicine" be required? A cut in Fed interest rates now would be sure to reduce the real rate of interest paid over and above inflation – a situation that typically leads investors across the world to buy gold in defense.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Gold prices live | Latest gold market news
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 2007

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