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GoldCore Update: Dubai Default Causes Contagion Concerns
Fri, Nov 27 2009, 11:17 GMT
by GoldCore Bullion Services Team
Gold
Gold
reached new record highs at $1,195/oz yesterday but has experienced the
much anticipated correction overnight. Gold is currently trading at
$1,157/oz and in Euro and GBP terms, gold is trading at €777/oz and
£706/oz respectively. Gold is down some 3% and the correction is likely
due to a combination of factors.
After gold's recent sharp gains, a much needed correction and consolidation was expected and profit taking was due also. The primary factor in gold's sell off is not risk aversion per se, rather the speculative leveraged players going to cash in the very short term due to turmoil in equity markets due to the uncertainty created in the light of the Dubai default. Sell offs like this have been common when international equity markets sell off sharply. Gold becomes correlated with equities in the very short term but what has happened so far in this bull market and will likely continue (as long as gold remains in a bull market) is that gold generally falls by less in the sell off and then bounces back quicker in the aftermath of the sell off.
Ironically the panic sown from the Dubai default is likely to lead to even more investment demand for gold. Especially as Dubai is just one country confronted by the growing international debt crisis - others include Greece, Spain, Hungary, and Latvia. The potential risk of contagion (particularly in the sovereign debt market) will likely mean that gold's sell off is again just one more correction in an ongoing bull market.
Silver
Silver was as high as $18.45/oz overnight. Silver has fallen by 3.6%
and is currently trading at $18.00/oz, €12.07/oz and £10. 97/oz.
Platinum Group Metals
Platinum is trading at $1,430/oz and palladium is currently trading at $360/oz. While rhodium is at $2,800/oz.
Published on Fri, Nov 27 2009, 11:19 GMT
Archive
- GoldCore Update: Poor German and UK Data Underlines Sterling and Euro Risk
Published On Tue, Feb 9 2010, 12:11 GMT - GoldCore Update: Gold Technically Damaged But Fundamentals Remain Sound
Published On Mon, Feb 8 2010, 11:21 GMT - GoldCore Update: Turmoil on Sovereign Contagion and Economic Growth Risk
Published On Fri, Feb 5 2010, 10:41 GMT - GoldCore Update: Concerns About Dislocation in Sovereign Debt Markets and Eurozone Contagion
Published On Thu, Feb 4 2010, 10:50 GMT - GoldCore Update: Precious Metal Analysts Bullish in 2010; Asia Favours Gold as Inflation Hedge
Published On Thu, Jan 28 2010, 12:23 GMT
Gold and Silver Investments Limited
| 63 Fitzwilliam Square, Dublin 2, Ireland
http://www.goldcore.com | info@goldcore.com
Legal disclaimer and risk disclosure
The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Gold and Silver Investments Limited, trading as Gold Investments is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.Related reports
London Gold Market Report by BullionVault.com
Tue, Feb 9 2010, 14:53 GMT
Stocks Getting a Boost as Speculators Await Greek Resolution by ForexHound.com
Tue, Feb 9 2010, 13:37 GMT
Gold nearly steady above 1060 $/oz by KBC Bank
Tue, Feb 9 2010, 11:08 GMT
Metals edge higher on the Euro but remain vulnerable by The Bullion Desk
Tue, Feb 9 2010, 09:01 GMT
Today's Trading Signals by Financial Trend Analysis
Tue, Feb 9 2010, 08:57 GMT
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