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London Gold
Market Report
THE PRICE OF GOLD sat
tight above $1290 an ounce in London
on Thursday morning, holding 1.4% above last week's close as European stock
markets extended their losses to 1.2% and crude oil dropped below $74 per
barrel.
"Gold has remained fairly steady around yesterday's closing level, in
spite of a stronger Dollar," says one London
dealer in a note.
"A quiet session overnight," says another, with gold
"basically tracking the Euro" against the US Dollar as Tokyo
and Hong Kong joined Shanghai
in closing for a holiday.
The Dollar today knocked the Euro 0.5¢ off Wednesday's 24-week high
above $1.34, but it fell back against the Japanese Yen.
New data meantime revealed a downturn in European services and manufacturing
output, a further decline in UK
mortgage and business lending, plus higher-than-expected US
jobless claims for last week.
"Gold was, and is, used as a symbol of status and value, and the basis
for that is its rarity," said BBC business editor Adam Shaw on Radio 4's
agenda-setting Today
program this morning.
"A government [in contrast] can print as much money as they like,
flooding the market and undermining the currency's value."
Examining Tuesday's US Federal Reserve statement, "The Fed had indicated
previously that further quantitative easing would be conditional upon a
worsening of the economy," says the latest Commodities Weekly from Natixis bank.
But "Their message this week suggested this was not
necessary...suggest[ing] that quantitative easing may commence
imminently."
"In the race to the bottom in the game of currency devaluation, the US
continues to pull ahead," says RBS's Global Views report.
"Japan
fought back valiantly with its unsterilized intervention a week ago...[and]
the Eurozone has lost ground for the time. [But] with all the major
currencies looking shaky, gold is hitting new
highs."
"The evils of inflation are well known...and inflation [is] above target
and expected to remain so until the end of next year," said Bank of
England policy-maker Spencer Dale in a speech to business leaders in Cardiff,
Wales
last night.
"I recognize that reassuring words and good intentions are not
enough," he said, before delivering a technical presentation on pricing
models and theory.
The Bank of England has now kept base rate at a record low of 0.50% for 18
months running. Consumer price inflation has exceeded the Bank's upper
tolerance of 3.0% per year for 9 months in succession.
On a trade-weighted basis, the British Pound has dropped one-fifth of its
exchange-rate value since the UK
banking crisis began three years ago this month.
The gold price in Sterling
today held above £821 an ounce, more than 32% higher from March 2009,
when the Bank launched its own quantitative easing.
"The conditions for a major appreciation of the Renminbi do not
exist," said Chinese premier Wen Jiabao, rebutting calls for a 20% rise
in his currency (also called the Yuan) ahead of meeting US president Barack
Obama at the United Nations in New York today.
"The main reason for the US
trade deficit with China
is not the Renminbi exchange rate, but the structure of trade and investment
between the two countries."
Over in Dublin, meantime, Irish finance minister Brian Lenihan suggested
today that the lowest-ranking creditors to Anglo Irish Bank will not be
repaid in full.
Default insurance on Irish banks leapt, and yield spreads on Irish government
bonds jumped to new records above comparable German debt.
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.
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