|
|
London
Gold Market Report
THE
PRICE OF GOLD in US Dollars edged up to fresh record
highs above $1283 at the start of London trading on Monday, while silver
re-visited last week's 30-year highs above $21 per ounce.
World stock markets also rose sharply, as US crude oil futures recovered to
$73 per barrel.
Major government bonds slipped, nudging yields higher, but Irish and
Portuguese spreads over German Bund yields rose to fresh post-Euro highs.
"Friday's disappointing US data flow gave the gold bulls another reason
to buy," notes Leon Westgate at South Africa's Standard Bank today.
"A weaker Dollar has added to gold's upward momentum this morning."
Trading around €31,500 per kilo for Euro investors today, gold stood
unchanged from mid-August, despite the 3.5% rise in Dollar prices.
Priced against the US currency, in fact, gold ended Friday showing its
strongest connection with the Euro since the start of July, displaying a
daily correlation right in line with its 10-year average at +0.47.
Previously in 2010, in contrast, gold had averaged almost perfect
non-correlation with the Euro, displaying a co-efficient of –0.06.
That figure would read +1.00 if they moved perfectly in lock-step together
against the Dollar. It would stand at –1.00 if they were utterly
opposed.
Gold's correlation with the Euro hit a record low of –0.88 in May this
year. It has not reached +0.90 since Feb.
"Gold [in Dollars] registered a strong up week," notes the latest
technical analysis from bullion bank Scotia Mocatta.
"The break of previous record high of $1265 opens up a new topside
target of $1369," says Russell Browne, spying the start of Wave 5 in an
Elliott Wave pattern.
Over in Asia today – where the Thai government became the latest
central bank to announce larger gold bullion holdings on Friday –
"Volumes were quieter" following last week's late flurry, says one
Hong Kong dealer today.
Japanese traders were on holiday today to mark Respect for the Aged Day.
"Besides sporadic Chinese buying, [gold deals] went through electronic
trading."
In New York, the volume of gold bullion needed to back the SPDR Gold Trust
– the world's largest gold ETF – also jumped late last week,
undoing two weeks of declines to swell above 1300 tonnes.
New data released by US regulator the CFTC late Friday showed the "net
long" position held by speculative traders and private investors in gold
futures and options last week exceeded 1,000 tonnes equivalent for only the
7th time ever.
Rising 1.5% from the previous Tuesday's position, the "net long"
remained 2% below the record level of Dec. 2009, however, while the total
"open interest" in all gold futures and options rose at its fastest
pace in a month, swelling by almost 3% to stand above 822,000 contracts
– just 1.6% off its record peak of May this year and larger by nearly
two-thirds from its five-year average.
Meantime in the bond market, and after Barclays Capital was blamed for
Friday's slump in Irish bond prices – warning that the International
Monetary Fund may still have to rescue Dublin "in the medium term",
spurring the European Central Bank to buy Irish debt in the open market
– the three big ratings agencies today ranked Europe's own
stabilization program "AAA" in a flurry of announcements.
Moody's, Fitch and Standard & Poor's all gave the new European Financial
Stability Facility their top rating, meaning its bonds – issued to
finance the purchase of weaker European government bonds – can be held
by pension and insurance funds worldwide.
Both Irish and Portuguese bond prices continued to fall, however, versus
comparable German debt, driving their 10-year yield spreads to new record
highs.
"Both governments are [also] paying yields well over the 5% that would
be offered by the EFSF," notes the FT's Alpha blog.
"Ireland is expected to post a [budget] deficit of 25% of GDP this year,
when bank losses are added," says Independent.ie – "the
largest in Europe."
Ireland goes to market tomorrow with an auction of four- and eight-year
government bonds.
Tuesday also brings the latest US Federal Reserve decision on Dollar interest
rates.
Adrian
Ash
Head of Research
Bullionvault.com
You can also Receive
your first gram of Gold free by opening an account with Bullion Vault : Click
here.
City correspondent
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
it.
|
|
