Gold Market Report
PRICE OF GOLD ticked lower on Thursday morning in
London, drifting 0.6% from yesterday's 4-month high for Dollar investors as
stock markets rose with the Euro on calls for a sudden resolution to the
Greek government-debt crisis.
Commodities rallied almost 1% on average as crude oil rose back above $84 per
With volatility in the options market "starting to pick up and fresh
[Dollar] highs for 2010 having been achieved," says one London dealer in
a note, gold's "target on the charts is now $1226."
"Resistance is seen at 1193 which is the top of a 3-month bull channel
off Feb.'s low at 1045," says the latest note from bullion-bank Scotia
Mocatta's chart analysts.
Gold's "unstoppable ascent" puts the "Fibonacci retracement at
1187.95 in sight," says Commerzbank's technical analyst Axel Rudolph in
his Bullion Weekly.
Easing back from its best London Gold Fix for Dollar investors since Dec. 4th
this morning, the price of gold set a new record fix for UK buyers above
£768 an ounce.
The gold price in Euros slipped 1.4% from yesterday's new record high,
trading 7% higher from the start of April at €28,300 per kilo.
"In the current situation, the impact [of a Greek default] on financial
markets and other states would be incalculable," writes German central-bank
president Axel Weber – a member of the European Central Bank's
governing council – in today's Bild tabloid.
"Financial aid tied to tough conditions is for all parties concerned the
Wednesday saw two-year Greek bond yields touch 25% as prices slumped yet
"Greece is not longer in the position to take up money at the financial
markets and is thereby in fact bankruptcy," says an editorial in the Frankfurter Allgemeine Zeitung.
Current discussions now center on Athens' funding needs being taken
"entirely off market" by a 3-year package of perhaps €150
billion in Eurozone-government loans, according to press reports.
Here in London meantime, and ahead of tonight's final 'Leaders' Debate' on TV
before next Thursday's general election, governor of the Bank of England
Mervyn King was quoted by a US economist, David Hale, as saying that
"Whoever wins this election will be out of power for a whole generation
because of how tough the fiscal austerity will have to be."
"We are experiencing a moment of great uncertainty, characterized by a
sideward trend" in the Dollar-gold price, writes Filippo Finocchi from
the trading desk at Italian bullion dealers Italpreziosi in Arezzo.
"We recommend extreme caution in taking positions because of high
volatility and uncertainty."
"Gold works well in inflation times, which is not the case at the
moment," says Mario Spreafico, an investment manager at Schroder Italia,
speaking to financial paper Il Sole 24 Ore in Milan.
"The gold price is already very high. It is an asset where money comes
and goes for speculation only."
Money supply in the 16-nation Eurozone shrank by 0.1% in the year-to-March,
new data showed today, slowing the pace of deflation from Feb.'s 0.4%
German unemployment fell this month from 8.0% to 7.8% of the working
Although negative, Eurozone consumer and business sentiment both came in
above analyst forecasts today.
"We've been seeing large flows into gold because of concerns of
sovereign risk and downgrades occurring in Europe and that is likely to
continue," said David Moore at Commonwealth Bank of Australia to
"People are looking to avoid risk."
Euro gold prices have risen by 27.5% in the last year. They have almost
tripled from the single currency's launch a decade ago.
Head of Research
You can also Receive
your first gram of Gold free by opening an account with Bullion Vault : Click
for The Daily Reckoning in London, Adrian Ash is head of research at BullionVault.com –
giving you direct access to investment gold, vaulted in Zurich, on $3 spreads
and 0.8% dealing fees.
Please Note: This
article is to inform your thinking, not lead it. Only you can decide the best
place for your money, and any decision you make will put your money at risk.
Information or data included here may have already been overtaken by events
– and must be verified elsewhere – should you choose to act on