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
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Headed for Weekly Loss, Eurozone Plan Lacks Concreteness

Commodities / Gold and Silver 2011 Oct 21, 2011 - 09:42 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices climbed to $1637 an ounce Friday lunchtime in London – 2.0% up on this week's low – while stocks and commodities also rallied despite ongoing uncertainty over plans to solve the Eurozone crisis.

"Gold is starting to garner some interest as some participants start to view current prices as good entry levels," says Marc Ground, commodities strategist at Standard Bank.


"Is gold going to get back up to the highs?" asks Credit Agricole analyst  Robin Bhar.

"That's looking less certain now. It's not on the agenda, although you can never say never."

Despite Friday's rally, gold bullion looked set for its first weekly loss of the month – 2.6% down as we headed into the weekend.

Silver bullion meantime rallied to $31.13 per ounce – though still a 3.4% drop for the week.

European leaders have scheduled a second meeting next week – in addition to this weekend's European Union economic summit – stating that there is not enough time to finalize an agreement by Sunday.

German chancellor Angela Merkel also cancelled a speech she planned to give to the Bundestag Friday, which was to include details on proposals for the European Financial Stability Facility – the Eurozone's ad hoc bailout fund set up last year.

"Without any concrete proposal for increasing the efficiency of the fund the chancellor can't present a complete set of proposals," explained Bundestag member Norbert Barthle, a member of Merkel's Christian Democratic Union party.

European governments are set to allocate as much as €940 billion to fighting the crisis, news agency Bloomberg reported Friday.

"The market wants the Euro crisis solved yesterday," says Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York.

"Politicians and finance ministries seem to be saying "yes we can, but no we won't"...Europe has the wealth...it is just that the process is incredibly complex."

Reports suggest France favors turning the EFSF into a bank – which would allow it to access European Central Bank funds. German, in contrast, is said to prefer using EFSF money to insure a portion of 'first losses' on debt issued by troubled sovereigns.

"This clearly creates the prospect of a two-tier market with guaranteed debt trading at a premium to noninsured paper," says Steve Barrow, research analyst at Standard Bank.

"[This] is not a way out of the crisis in our view."

"[There is a] risk, " adds Huw Pill, chief European economist at Goldman Sachs in London, "that the post- summit announcements will suggest an ambitious program at a high level but lack concrete detail on implementation...given previous experience, markets are unlikely to be very tolerant of such an outcome."

"With this weekend's meeting now apparently redundant," adds one gold bullion dealer here in London, "and with the prospect of decisive action effectively postponed until the middle of next week, it seems likely that markets will tread water and play it cautiously as we enter the weekend."

Elsewhere in Europe, the European Securities and Markets Authority is considering suspending sovereign credit ratings for countries that have been granted a bail out, the Financial Times reports.
"It is not the thermometer that causes the fever," conceded Michel Barnier, European internal markets commissioner.

"But the thermometer has to work properly to ensure you do not exaggerate the fever."

Barnier this week welcomed a European Parliament agreement to seek a ban on so-called naked positions in sovereign credit default swaps – whereby traders buy a CDS to profit from a sovereign default without owning the bonds issued by that government.

These regulatory proposals follow the ban on short selling of financial stocks imposed by France, Spain, Italy and Belgium in August – a ban that remains in place.

Rating agency Standard & Poor's meantime has released the results of new stress tests it conducted for a number of Eurozone sovereigns. The stress tests looked at two scenarios: a double dip recession, and a double dip recession accompanied by a spike in interest rates.

"Sovereign ratings on France, Spain, Italy, Ireland, and Portugal likely would be lowered by one or two notches under both scenarios," said an S&P statement.

Over in India – the world's biggest market for gold bullion – gold dealers have stepped up their purchases of bullion ahead of next week's festivals, including Diwali, news agency Reuters reports.
"Buying has started and come out in huge quantities," says Haresh Acharya, head of the bullion desk at Parker Bullion in Ahmedabad.

"There are good buy orders close to $1,600," adds a Mumbai-based dealer at a state-run bullion bank.

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

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.


© 2005-2022 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