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 Follows Crude Oil Lower, ECB Warns Inflation Won't Fall in an Recession

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

By: Adrian_Ash

Commodities SPOT GOLD PRICES fell back at lunchtime in London on Thursday, slipping 0.7% towards this week's low of $955 per ounce as Western stock markets continued to rally on falling oil prices.

The price of crude oil has now dropped $12 from Tuesday's high above $146 a barrel.


Here in London the FTSE100 stock index today jumped 3.2% from Wednesday's three-year low.

The US Dollar held steady on the forex market after yesterday's bounce from fresh all-time lows after J.P.Morgan reported better-than-expected second quarter results, down just 53% from the same period in 2007.

"It takes very little to see Gold make a comeback these days," notes the latest Asian Metals Monthly, produced by Virtual Metals on behalf of Fortis, the giant Dutch banking group.

"The trouble for gold investors is that there are too many times when it needs to make a comeback.

"The rally in June and July (so far) has been impressive," it goes on, but pointing to the sharp reduction in forward "hedge book" sales by AngloGold – the largest gold mining group in Africa – between April and June, "the Gold Price will increasingly depend on investment," VM adds.

"This is already substantial but it could go much higher if the financial system threatened to implode."

On a fundamental basis, "the elevated credit risk and heightened inflation awareness should ensure good support for gold and silver," agrees Walter de Wet at Standard Bank in Johannesburg .

Gold "still offers a short-term bullish picture," writes Phil Smith in his Market Technicals note for Reuters India today, "and our splendid triangle formation [repeating the pattern seen last Nov., just before Gold leapt 30% inside three months] is not letting us down."

Smith's short-term target remains at $1,020 per ounce. "The bullish run which started mid-June stalled briefly but [it] has broken through resistance at 953...This now becomes support."

On the currency markets today the Euro failed to hold a brief rally to $1.5890, despite a report from the Financial Times that the world's largest state-owned sovereign wealth funds are cutting their US Dollar investments.

"One big sovereign fund in the Gulf has cut its Dollar-denominated holdings from more than 80% a year ago to less than 60%," the FT explains, "while China's State Administration of Foreign Exchange (SAFE) has been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its Dollar holdings."

The Gold Price in Euros slipped this morning to a three-session low of €604 per ounce.

For British investors battered by a 20% drop in the FTSE share index and a 16-year jump in inflation, the price of Gold slipped to a one-week low beneath £480 per ounce.

"It's a mistake to think that inflation will fall if the economy weakens," warns European Central Bank member Nout Wellink in an interview with Elsevier magazine today.

"We saw that in the 1970s. If you don't act, you get high inflation and low growth – stagflation.

"It will take ten years before you get it back under control if you don't intervene." ( Can Recession Kill Inflation? Read on here... )

Taken as a threat of further ECB rate hikes ahead, Wellink's comments stand in sharp contrast to Fed chairman Ben Bernanke's testimony to the US Congress this week.

Only one Fed member, Dallas bank president Richard Fisher, voted for a rate hike at the US central bank's June meeting.

Last month the cost of living in America rose at its fastest pace since 1982. It has risen by almost 5¢ in the Dollar since the Fed began slashing interest rates in Sept. '07, causing a collapse in the US currency's market value.

According to the latest Fed minutes, however, Bernanke's team remain convinced they can boost economic growth by keeping interest rates – and therefore the Dollar – low.

"[We] see the risks to economic growth as skewed to the downside," the committee agreed.

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