Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Cara Therapeutics - CARA - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 28th Sep 21
US Antitrust Against the Big Tech - 28th Sep 21
Gold Medium-Term Downtrend: Gold Miners in the Lead - 28th Sep 21
Reflation vs. Economic Stagflation - 28th Sep 21
Corsair iCue H150i RGB Pro XT FULL Review! Software, Failed Firmware Update Unbricking Fix! - 28th Sep 21
Blueprint Medicines - BPMC - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 27th Sep 21
China, India: Richer or Poorer? The Asian Pacific Financial Markets Forecast - 27th Sep 21
Stock Market Bubble Valuations Dot Com 2000 vs 2021 - 27th Sep 21
Gold When the Tight Economic Rope Slackens - 27th Sep 21
The U.S. Government Plans to Default on Debt the Dishonest Way - 27th Sep 21
Stock Market Retest of the High? - 27th Sep 21
Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
Will Biden’s Neo-Populist Economic Doctrine Support Gold? - 25th Sep 21
Markets Deflationary Winds Howling - 25th Sep 21
Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? - 25th Sep 21
Cryptocurrency policy choices and consequences - 25th Sep 21
The Next Emma Raducanu UK Tennis Star Pleasing the Crowds at Millhouses Park Sheffield - 25th Sep 21
Stock Market Rescued by the Fed Again? - 24th Sep 21
Are Amazon Best Cheap Memory Foam Mattresses Any good? Bedzonline £69 4ft Small Double ECO Example - 24th Sep 21
Evergrande not a Minsky Moment - 24th Sep 21
UK Energy Firms Scamming Customers Out of Their Best Fixed Rate Gas Tariffs - 23rd Sep 21
Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Should School Children be Jabbed with Pfizer Covid-19 Vaccine To Foster Herd Immunity? - UK - 23rd Sep 21
HOW TO SAVE MONEY ON CAR INSURANCE - 23rd Sep 21
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold "Calms" as Stocks, Euro Leap on Brussels' €750bn "Shock & Awe"

Commodities / Gold and Silver 2010 May 10, 2010 - 07:56 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD fell hard from last week's record-high finish on Monday morning, losing 2% vs. the Dollar as commodities and global equities jumped on news of the European Union's new €750 billion "Stabilization Mechanism" plan.

The Euro currency leapt 2.6% during Asian trade, rising back above $1.30 – a level first broken in late 2004 – for the first time in five sessions.


Britain's Pound recovered almost half the last fortnight's drop vs. the Dollar, trading above $1.4950.

The French stock market leapt more than 8% by lunchtime in Paris. Frankfurt's Dax and London's FTSE100 both rose almost 5%.

Crude oil and base metals rose sharply. Silver was little changed.

"The impetus for last week's move [in gold] has calmed for the moment," says metals-conglomerate Mitsui's London dealing team in a note.

"Bigger picture, we could be forming another top around last year's December high," writes Phil Smith for Reuters India Technical, looking at the US Dollar price of gold.

"This could be a large double top and...[US futures' trading] volume has been tailing off, which is consistent with such a pattern."

Priced at €750 billion altogether – and far outweighing analyst expectations – the European Stabilization Mechanism is equivalent to "Shock & Awe, Part II and in 3-D" according to one shocked economist in London.

The EU Commission – funded by taxpayers from the 27 member states – will give €60 billion, while the 16 governments of the Euro currency zone will pledge €440bn.

Washington's International Monetary Fund has vowed to contribute a further €250bn.

Germany chancellor Merkel said the package was essential to defending the Eurozone project, but that all member states must now "put their house in order."

"[The bailout] proves that we will defend the Euro whatever it takes," said EU economic and monetary affairs commissioner Olli Rehn.

Coming as the IMF also approved a €30bn loan to Greece, the news sent major-economy government bonds sharply lower as "safe haven" buyers switched into commodities and stocks.

US investors looking to buy gold saw the price drop to $1185 from Friday's finish at $1209 an ounce.

Gold priced in Euros retreated 5.7% from Friday's all-time record high, bouncing higher from a 3-session low beneath €29,200 per kilo.

"The message has gotten through: the Eurozone will defend its money," claimed French finance minister Christine Lagarde today.

Defending "its money" means the European Central Bank has now reversed last Thursday's refusal to buy government bonds – the apparent cause of last week's collapse in financial assets globally – opting instead "to conduct interventions in the Euro area public and private debt securities markets...to ensure depth and liquidity."

Today's ECB statement says the pan-national central bank will "sterilize [i.e. negate] the impact" of these cash injections in the 16-nation Eurozone economy, but doesn't state how.

The ECB also joins the Bank of Japan and Bank of England in re-opening "temporary liquidity" lines of credit with the US Federal Reserve after the cost of inter-bank loans rose every day for the last two weeks, hitting a 9-month high on Friday after the biggest jump since Jan. 2009.

"With the precious metals delivering some of the greatest returns of any asset class so far in 2010, it is unsurprising to see some degree of profit-taking," says Morgan Stanley's Hussein Allidina in New York today.

Latest data on US gold futures and options – released after Friday's close – show speculative players growing their bet on gold rising further to the equivalent of 949 tonnes in the week-ending Tues 4 May.

The volume of gold bullion held to "back" shares in the SPDR Gold Trust – the world's largest exchange-traded gold fund – rose 2.5% last week to a new record of 1188 tonnes.

The mint in Poland, which was set to join the Eurozone in 2012 but currently has no accession plans, reported a 400% jump in sales of gold bars last week.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly 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 2010

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.


© 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