Daily Market Update

Gold Investments Market Update – China Announces Possible Diversification into Gold

China Considering Diversification into Gold

BEIJING (Dow Jones) – China’s central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country’s huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong. China’s foreign exchange reserves, at US$1.9056 trillion at the end of September, is the world’s largest. US dollar-denominated assets, including US treasury bonds and mortgage agency bonds, account for a big proportion of the foreign exchange reserves. Gold Confirms Its Safe Haven Status Amid Steep Global Stockmarket Declines Renewed concerns about the health of the global economy sent equity indices sharply lower and bond prices higher on Thursday. Gold’s safe haven status helped it stay steady around its best levels for around a week, moving $5.40 higher to $737.80 an ounce. It is currently trading at $745 (1300GMT). European equities markets extended sharp falls seen in late trade during the previous session, after Wall Street indices came under pressure. The London FTSE 100 fell 87 points or 2.2 per cent to 3,918.41, losing the 4,000-point mark and moving towards levels last seen in October. The FTSE 250, seen as more representative of the wider UK economy, dropped 76 points or 1.3 per cent to 5,632.28. Germany’s Xetra Dax 30 fell 2.7 per cent to 4,236.21 while the CAC 40 in Paris sank 2.5 per cent to 3,009.87. The Nikkei average plunged 6.9 per cent to 7,703.04, its lowest finish since the 26-year intraday low reached in late October. Overnight in New York the benchmark S&P 500 index plunged 6.1 per cent to 806.58, less than 4 per cent away from an 11-year low. Investors took fright at data that showed the cost of living plunged the most since records began in 1947 and the first decline in so-called core consumer prices, which exclude food and energy, in more than 25 years." FT.com

Bank of England Rate Cut

The Bank of England monetary policy committee considered cutting rates by 2% in November before settling for 1.5% prompting speculation that another 0.5% cut might happen when the committee meets in December. The Swiss National Bank also announced a 1% interest rate cut today, continuing the trend of lower global interest rates.

Lloyds Investors Back HBOS Rescue Plan

96% of Lloyds investors backed the bank’s controversial rescue of HBOS and its plans to raise £5.5bn of capital. Victor Blank, the Lloyds Chairman said that the landmark deal would transform his bank, deliver £1.5bn of cost savings and create value for both Lloyds and HBOS investors.

Mark OByrne

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