Gold rebounded yesterday after the jobless figures out of the US were worse than expected. This instigated a slump in equities and investors pumped funds into gold to hedge against falling stock markets. Gold is currently trading at $932.60/£571/€666.04.
Silver has regained some of yesterday’s losses but is still trading at $13.39, down from $14.13 only 4 days ago.
Gold: China has requested that a new global currency be discussed at next week’s Group of Eight meeting in Italy. The news sent the dollar into a downward spiral and the price of gold rallied above $940, confirming its status as a currency hedge. The dollar has strengthened slightly today resulting in a small drop off in the gold price to $926.70.
Gold was trading in the mid $930s in Tokyo overnight but buying in Europe this morning took it over the $940 level. With increasing concerns regarding the sustainability of the fabled "green shoots" and whether the recent recovery in equity markets can be sustained, gold will continue to be well supported. Especially as the relative merits of the individual major currencies (EUR, USD, JPY and GBP) look increasingly like an ugly sister competition. Gold is currently trading at $942.2/£570/€671.
The continued pressure of a strong dollar saw gold fall yesterday as it technically broke through the trend-line of $934. Despite equity weakness, gold remains heavy. A move lower in the short term would seem likely. However, with the gold/silver ratio of 68.7, a 1st quarter low, this downward trend may soon be capped and a bounce back to all time highs in July may be possible. It has gained slightly this morning and is currently trading at $920.34.
Due to this price breakdown, gold ETFs saw net inflows for the first time in 3 months.
Gold steadied on Friday as the dollar index reversed earlier losses but it is still taking its direction from the currency markets. The dollar remains in a very tight range ahead of a Federal Reserve meeting next week. Furthermore, the lack of any sell-off in gold in the wake of the latest IMF gold sale would indicate that the effect of these sales is already factored into the price.
The long term trend line price of gold at $925, which has been steady since Monday, pushed higher today based on news that the World Bank has raised its growth forecast for China. The Chinese stock market rallied as did commodities across the board. Another main factor behind the return of bullish sentiment for gold is the euro. In contrast to the US Treasury, the ECB has stated that it does not intend to cut interest rates further which has pushed the euro to 1.39444 and gold is holding firm.
Yesterday’s comments by Russian President Dmitry Medvedev at the BRIC summit, calling upon the International Monetary Fund (IMF) to expand the currency basket of Special Drawing Rights to include the Chinese yuan, commodity currencies and gold in order that it matures into a reserve currency, is positive for gold as it shows how gold is again being viewed as an important monetary asset.
Gold is currently trading at $930.40/€672 and £571.
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