15
Sep
2010

Gold Remains Near Record High as Risk Aversion Returns

Gold

Gold remains near record (nominal) highs with stocks in Europe and the US under pressure today as recent investor enthusiasm has waned. Further signs of a slowdown in the US economy were seen in a report which indicated growth in manufacturing activity in New York slowed this month. The inflation numbers were also worse than expected with prices of goods imported into the US rising by more than forecast in August as crude oil and food costs jumped. Gold is higher in all currencies today except sterling which has bounced after recent falls. Gold remains some 5% and 6% respectively below its record highs in euros and sterling suggesting that there is room for further price appreciation before this move up is exhausted.

Gold is currently trading at $1,268.65/oz, €974.98/oz, £812.16/oz.

Gold in USD – 5 Day (Tick). Click on image to view full size

Japan waded into the currency market last night for the first time in six years, selling yen after it spiked to 15-year highs. This has led to the yen falling against every currency and gold overnight (see Cross Currency Table). Traders question whether the Japanese attempt to artificially manipulate their currency lower will succeed, especially as there was no international coordination involving the Federal Reserve and European Central Bank. Speculators’ going long the yen will only be deterred if they believe that sustained and concerted manipulation and intervention is going to happen.

Gold in Yen – 5 Day (Tick). Click on image to view full size

Cross Currency Table. Click on image to view full size

Silver

Silver is currently trading at $20.51/oz, €15.76/oz and £13.14/oz.

Platinum Group Metals

Platinum is trading at $1,593/oz, palladium is at $559/oz and rhodium is at $2,050/oz.

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Mark OByrne