|
London Gold Market Report
THE DOLLAR gold
bullion price leapt 2.2% in less than an hour Tuesday lunchtime London
time, hitting $1832 per ounce – still 4.2% off last week's all-time
high – while commodities fell, US Treasury bonds rose and stocks were
mixed as Greek debt worries affected the Eurozone.
"Conventional wisdom is that
bullish sentiment on equities would mean bearish sentiment on gold,"
reckons one gold bullion dealer here in London.
"But the outlook remains
sufficiently uncertain that gold continues to find reasonable support."
"There's a little bit of bargain
hunting," adds Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong.
"Towards September, jewelers pick
up...festivals give gold a little bit of support for the time being. The
premiums are increasing due to some demand. There's not much sales of scrap
around."
Silver prices rose to $41.48 per
ounce – just above Friday's close.
"We see last week's low of $38.78
as an important technical pivot," say technical analysts at bullion bank
Scotia Mocatta.
"Topside resistance is seen at
$41.71. We are cautious owning silver as we do not believe the market has
recovered from the April/May large liquidation."
Stock markets rose on Tuesday in London
– which reopened after yesterday's bank holiday – with the FTSE
100 up over 2% by lunchtime, following gains for US and Asian stock markets
over the previous 24 hours.
In continental Europe, by contrast,
major stock markets sold off, with Germany's DAX down nearly 1%, while in
Paris the CAC fell 0.4%
Some European banks are not taking
sufficient writedowns on the Greek debt they hold,
according to the International Accounting Standards Board, which oversees
markets on behalf of the European Union.
"It is hard to imagine that there
are buyers willing to buy those bonds at the prices indicated by the
valuation models being used," warned IASB Hans Hoogervorst
in a letter dated August 4 and published Tuesday.
The letter's publication follows calls
for an "urgent recapitalization" of Europe's banking sector, made
on Saturday by International Monetary Fund managing director Christine Lagarde.
"Monetary policy also should remain
highly accommodative, as the risk of recession outweighs the risk of
inflation...policymakers should stand ready, as needed, to dive back into
unconventional waters."
Brussels dismissed the idea on Monday.
"We've always preferred the private
sector to come up with solutions by themselves," said EU spokesman Amadeu Altafaj-Tardio.
"European banks are much better
capitalized than they were even a year ago...[but]
national public authorities have also drawn up contingency mechanisms in
case."
Elsewhere in Europe, Finland continues
to insist on receiving some form of collateral in return for contributing to
a Greek bailout.
Greece agreed earlier this month to post
cash as collateral against the Finnish portion of the rescue deal – a
proposal with which other Eurozone members are unhappy.
"In normal circumstances, demanding
collateral is quite usual," Germany's deputy foreign minister Werner
Hoyer says in an interview published Tuesday by Finnish newspaper Helsingin Sanomat.
"But now Greece has put the ball
back in Finland's court by saying that Finland will get the cash collateral
from the other Euro countries...that will naturally not do."
"I'm not happy with [the
Finland-Greece deal]", said Jean Claude Juncker,
chairman of the Eurozone finance ministers, on Monday.
Finland's government would, however,
"likely collapse" if it backed down on its collateral demand,
according to Timo Tyrvaeinen,
chief economist at Finnish bank Aktia.
“What's at stake is...the entire
second rescue package for Greece by the Euro area," reckons Frank
Engels, Frankfurt-based co-head of European economy at Barclays Capital.
On the gold futures markets
meantime the number of noncommercial – so-called speculative –
long positions held by traders on New York's Comex
fell 3.4% in the week ended 23 August.
"The fall off in gold speculative
longs points to a market that whilst not overly bearish (no strong surge in
speculative shorts) is questioning further upside for gold," says Marc
Ground, commodities strategist at Standard Bank.
"Speculative shorts remain above
last year's average. Further price dips in the near term can be expected,
should the market's perception of risk start to change."
Ben Traynor
You
can receive
your first gram of Gold free by opening an account with Bullion Vault : Click here.
|
