Gold and silver rose ($939.80 up $4.40 - Silver $13.65 up 18 cents) yesterday on deepening concerns about the dollar and fears that its reserve currency status is threatened. Next week could see sharp moves in financial markets as the dollar’s dominance in the international monetary system is set to be questioned at the G20 Summit (Thursday, April 2nd). The US creditors in China and Russia are proposing creating a new supra-national reserve currency, thereby lessening dependence on the dollar.
Gold and silver fell yesterday ($923.30 down $29.70; Silver $13.34 down 52 cents) on profit taking and renewed risk appetite which saw equities rally internationally (prior to a late sell off in the US) and the dollar rally after its recent sharp falls. Macroeconomic, systemic and monetary risk has seen the dollar, the euro and more particularly sterling fall versus gold in recent months.
It was a historic week, with the Federal Reserve opting for the "nuclear option" of money creation on a trillion dollar scale. Gold and silver rose 2.7% and 4.5% respectively.
Gold surged 8% yesterday (as is the norm, the far smaller market that is silver surged by even more and was up by 13.3%) as the shock Federal Reserve announcement led to concerns regarding the dollar and the inflationary implications of massive money printing and debasement of the currency. The dollar has fallen sharply against all currencies and particularly against the finite commodity and currency of gold which cannot be debased.
Gold fell in US trading hours yesterday for no apparent reason; but on the Fed announcement, gold surged by nearly 7% in afterhours access trade. Gold leapt from its session low of $884.10/oz to a high of $946.20/oz, a jump of nearly 7 per cent and silver also surged some 7%.
Gold fell yesterday for the first day in 3 and was down some 0.8%. Gold was flat in Asia but has fallen again in Europe to $915/oz.
Gold and silver rallied over 1% and 2% yesterday as stock markets barely made gains in the US.
Gold fell 2.2% yesterday (silver -3.1%) as increasing risk appetite saw stock markets in the US surge. A rally in stock markets was overdue but the sustainability of this latest rally is doubtful and equity markets in Asia were mixed and after a lower start, are tentatively higher in Europe.
After the bounce in recent days, gold sold off again yesterday and was down 2.77% (silver -3.2%). After the falls seen in the last two weeks a period of consolidation will be needed and gold may fall further prior to rising strongly above the psychological and technical level of $1,000/oz. With $50 trillion having been wiped off the value of assets internationally (primarily property and equities) there will likely be a long term shift towards risk aversion and wealth preservation.
Gold's recent downward trend may have ended last week after gold closed moderately higher for the week (gold +0.03% and silver +1.75%). The performance was impressive considering the continuing steep declines in stock markets (Nasdaq , DJIA, S&P down 6.1%, 6.17% and 7.03% respectively). Gold's outlook remains extremely positive especially as big money interests are once again realizing the safe haven attributes of the yellow metal.
As expected gold bounced yesterday after its recent sharp falls. Gold's lack of correlation with equities (gold has occasional very short term correlation with equities) was seen again as gold and silver were up some 2% while major US indices were down by some 4%. Citigroup, once the world's largest bank, fell below $1 per share and General Motors is struggling to avoid bankruptcy.
Gold fell for the eighth straight session yesterday to have the longest losing streak since June 2006 (silver broke its losing streak). Gold is clearly oversold in the short term and due a bounce.
Gold fell for the seventh straight day yesterday and is now down nearly 9% from its recent high just above $1,000/oz - see chart below). Gold had become overbought in the short term and had risen over 24% in just over a month ($806/oz on January 14th to over $1,000/oz on February 20th ).
Asian stock markets followed their US counterparts in falling overnight and after an initial rally in Europe, indices are again under pressure (especially the FTSE which is down another 1.8%). Gold has fallen as well but not by as much as most equity indices. While US indices were down between 4% and 5% yesterday, gold was only down by $3.00 to $938.80/oz.
Gold rose sharply in Asia and was up by more than $10 per ounce before trading even commenced on the TOCOM – it rose from $941.60/oz to nearly $960/oz but has given up some of those gains in early trading in London and is now trading back at $950/oz. Gold and silver fell over 5% and 9% last week after surging in the previous weeks and remain up nearly 8% and 17% so far in 2009. In the short term anything can happen in all of these markets and volatility remains very high in all markets. Correction and consolidation was expected and warned of.
Gold's correction continues and it has fallen for four days in a row now but the long term fundamentals remain very sound. Bargain hunters are likely to reemerge at these levels which should be supportive. Gold remains up more than 7% so far this year (in dollar terms as per table and much more in euro and sterling) and continues to significantly outperform battered stock markets.
Gold fell yesterday on profit taking and ended the day down 2.3% at $969.25/oz (silver fell by 3.1% to $13.98/oz). A short term correction was expected and warned of and this correction was necessary after gold becoming overbought in the short term. Gold had rallied over $100 (from $890/oz on February 9th to just over $1,000/oz on February 20th) or some 12% in less than two weeks.
Gold and silver remained resilient yesterday (gold slightly lower; silver slightly higher) despite the continual wave of mini tsunamis shaking the global economy.
Gold has given up some of last’s weeks very large gains and is down 0.6% after Asian and early European trading. With gold up some 13% so far in 2009, some correction and consolidation may be necessary prior to overcoming resistance at $1,000/oz. The inverse correlation between stock markets and precious metals was seen again last week as gold and silver surged by over 6% while most major stock markets were down by some 6% (S&P 500 was down by 6.8%).
Gold has rallied strongly again this morning and is up 1.5% at $990/oz after consolidating around the $975/oz mark yesterday. Stock markets are under severe pressure again this morning after yesterday’s 7 year low close for the Dow Jones. There is a risk here of a panic sell off in stock markets and the next leg down in the stock bear market looks imminent as the ills of the global financial system virulently infect the global economy.
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