Gold fell yesterday on a bounce in the dollar and renewed weakness in the oil and commodity markets. While gold has clearly decoupled from oil and commodities in recent weeks, due to its safe haven currency credentials, oil and the commodities can still effect gold’s performance in the short term. As can weakness in stock markets. Gold trading on the COMEX in the US opening hours has been increasingly correlated with stock markets in recent weeks and months . This correlation with stock markets is however of a short term nature as can clearly be seen in gold’s outperformance of equity markets in recent months and years. The volatility in currency markets is huge and the dollar has rebounded strongly in the last 24 hours (from over 1.47 to back to 1.40 ) which is putting pressure on gold as is the weakness in stock markets. However, the stock market weakness and very uncertain outlook for 2009 will lead to further safe haven demand. Silver to Continue to Outperform Gold and Other Assets in 2009 Silver has fallen sharply in recent months but will still outperform all major equity indices in 2008. This is quite an achievement especially given the fact that silver has surged in value in recent years and particularly in late 2007 and the start of the financial and economic crisis.
Gold's safe haven credentials have been reaffirmed in recent days as the dollar's safe haven appeal is increasingly being questioned (see News and Commentary section of homepage). The scale and speed of the decline of the dollar (and to a lesser extent, sterling) in recent days is unprecedented. The dollar has fallen against all major currencies but especially the euro.
The surprise move by the Fed to lower the Fed funds rate by more than 75 basis points to a record low and an unprecedented band between 0.25% and 0% led to sharp falls in the dollar (low of 1.4188 to the euro) and a spike in the gold price to over $859.40/oz. The Federal Reserve has embraced 'Helicopter Bernanke's' "inflate or die" massive reserve and money creation academic theories in an attempt to prevent deflation. Markets realise that this will lead to a lower dollar and higher gold prices in the medium and long term.
Gold rose again yesterday and the dollar fell sharply in anticipation of the Federal Reserve further slashing interest rates to record lows of 0.5% today. In a desperate bid to prevent a recession deepening, the Federal Reserve is prepared to slash interest rates to an all-time low near 0% today. With ZIRP (zero interest rate) policies, the US and global economy and monetary system is entering unchartered territory which is leading to continuing safe haven demand for gold.
Gold rallied sharply last week and was up nearly 9% despite continuing uncertainty and a very mixed performance in stock markets. The US dollar index fell some 4% on the week and it looks increasingly likely that the dollar may have topped out and may soon resume its bear market.
Gold rallied sharply yesterday, for the fourth day in a row, on sharply higher oil prices (some 10%) and a weaker dollar. Gold gave up some of its gains overnight in Asia as the dollar bounced after recent sharp losses in volatile trade. Gold’s rally yesterday had nothing to do with an increase in risk appetite. If that was the case, why have stock markets internationally been falling sharply again in recent days and yesterday?
There have been a spate of articles in the press recently including the Personal Finance section of the Irish Times touting jewellery and diamonds as safe haven “rock solid” investments. Rock solid investment Looking for a rock-solid investment? A girl's best friend and a smart way to invest This is dangerous nonsense and irresponsible journalism of the highest order. Investors have lost enough money in recent years due to appalling investment “advice” regarding equities and property and it is important they do not compound that by “investing” in diamonds and jewellery. As ever real diversification in all asset classes is essential.
Gold rallied sharply yesterday, for the third day in a row, on higher oil prices and a weakening dollar.
Gold rallied for a second day yesterday on concerns regarding the deepening US recession and the dollar. Gold has continued to rally in Asian and early European trading. The bounce in oil prices is likely lending support as is continuing robust physical demand internationally. Asian equity markets were largely positive overnight but European ones are again under pressure this morning. The global deflationary spiral appears to be accelerating as are desperate attempts by politicians and central bankers to reflate their way out of the recession.
It wouldn't be suprising if you had never heard of backwardation. Though many commodities markets are frequently in backwardation, especially for seasonal or perishable/soft commodities, it has only happened twice in history in precious metals.
After falling sharply last week, gold rallied yesterday on the back of a weaker dollar, higher oil (Light Sweet Crude Oil Future - Combined - JAN09 is up more than 6% yesterday after falling an incredible 25% last week) and commodity prices and the Obama fiscal stimulus package. The economic recession will get significantly worse before it starts to improve, US President-elect Barack Obama said in an interview at the weekend.
Gold and silver were flat yesterday and have remained unchanged in Asian and early European trading. Gold is set for a fourth straight week of gains on safe haven demand and on the likelihood of further dollar declines with further reductions in U.S. and international interest rates and further quantitative easing next month. Euro gold and British pound gold remained firm at €633 and £529 after recent gains.
Both gold and silver fell slightly yesterday as the dollar and stock markets rallied on renewed increasing risk appetite. Euro gold and British pound gold remained near record highs of €628 and £532. Gold has traded sideways in Asian and early European trading despite the horrendous terrorist attacks in India.
On the foot of recent reports that China is planning to diversify some of its massive foreign exchange reserves into gold, The Central Bank of the Russian Federation has released its latest
Gold was largely unchanged yesterday after rallying to as high as $830 and has traded sideways in Asian and early European trading. Open interest levels in gold and silver on the COMEX have fallen to extremely low levels showing that nearly all the speculative froth has been liquidated and remaining longs are "strong hands".
Gold has given up some of yesterday's and the last four days' gains. Profit taking seems the most likely explanation as the dollar remains largely flat but the weakness in oil may be contributing to gold's weakness. Continuing unprecedented volatility in markets is leading to further safe haven demand.
Gold gains 6% in one week In a remarkable week for the yellow metal, strong resistance at $770 last Monday may now be the level of support as Gold rallied on Friday, finishing up $50 on the day, 6% on the week.
Or is that Bailout to the power of Bailout?
Gold maintains its safe haven status In an increasingly risk averse environment and in the wake of tumbling commodity markets, gold is maintaining a bid, albeit in a tight trading range with strong resistance at $777 , confirming its status as a safe haven asset. Gold is currently trading at $755 (12:15GMT).