Gold 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 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 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. Silver
Gold 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 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.
Gold: 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.
Gold: 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. Silver:
Gold: Gold's correction has been quite sharp but given the extent of the rise since mid April (from $864/oz to over $980/oz or over 13% in just 6 weeks) it is not unexpected. A 50% retracement of sharp rallies is quite common and yesterday's lows of $925/oz is very close to an exact 50% retracement.
Gold rallied strongly yesterday to a high of $955, taking out the $945 resistance level in the process. Overhead resistance now stands at $967. The US dollar weakened significantly against all the major currencies as the negative sentiment towards sovereign credit shifted from the UK to the US in the wake of the S&P report yesterday. S&P have put the UK on negative watch from a credit ratings perspective. The expectation that the US could possibly lose its AAA credit rating, triggered a sell-off in US bonds and the dollar simultaneously.
Recent intense deflationary pressure had taken the shine off gold but with the dollar sliding yesterday, inflation came back to the fore causing gold to rise by more than 1.2%. This morning the metal was over $943, the highest in 8 weeks. This is a strong signal and it could be time for the resistance levels to be tested. If $946 is breached, the next level to look for would be $967. Silver was a little more sluggish than gold with only a 0.5% gain. It touched $14.40 this morning before moving back to $14.30. This could signal a correction, as $14.40 represents a double top.
Gold demand soared 38% to 1015.5 tonnes in the first quarter of 2009 according to The World Gold Council’s “Gold Demand Trends” report. A combination of factors including diversification, safe haven buying and inflation hedge demand are attributed with the upsurge. However, George Milling-Stanley, the Managing Director of the WGC also cites the global shift in sentiment from “capital appreciation to wealth preservation.” Rumours that the Russian Central Bank may allow Russian banks to pledge gold as collateral are also circulating the market.
Global markets perceive that economic green-shoots may be growing on stony ground as the rally in the Dow ran out of steam last week. Inflation figures published in the US suggested that core inflation may be higher than previously expected, contributed to the down week for the Dow and a minor strengthening of the Greenback. Despite the dollar strengthening, gold benefited from the outflows from both stocks and commodities.
Further consolidation was seen yesterday with gold and silver rising marginally again and both look set to have a second strong week of gains. While the staggering pace of economic decline has certainly abated, individual economies and the global economy continues to deteriorate as recessions deepen internationally.
Gold and silver were essentially flat yesterday and consolidated on recent gains despite a slight dollar recovery and marked weakness in equity markets. Gold has fallen somewhat in Asian and early European trading but still looks good from a technical perspective.
Gold and silver rose again yesterday (1.2% and 2.3% respectively) as the dollar continues to come under pressure. The dollar has fallen not due to an increase in risk appetite but rather an increase in risk aversion coming from the dawning realisation that the very credit worthiness of the US is at risk due to the global financial and economic crisis. The former US Comptroller General, David Walker, warned in an op-ed article in the Financial Times that “America’s Triple A Rating is at Risk”.
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