Mon, Sep 29 2008, 12:43 GMT
by Adrian Ash
SPOT GOLD BULLION PRICES recovered an early 1% dip vs. the
Dollar and leapt against other key currencies on Monday, as a wave of bank
failures and emergency rescues across Europe drove Treasury bond prices higher,
forcing the yield offered to new buyers still further below the rate of
inflation.
World stock markets sank, cutting 3% off European blue-chips and driving
Tokyo's Nikkei index towards fresh three-year lows, while the price of crude
oil slid more than $4 per barrel to $102.70 amid the panic.
"Despite the [$700bn] US
Bail-Out Plan now being committed to paper," said one London analyst
to Reuters, "there's hardly a jubilant mood.
"The fact the funds won't be released in one lot but instead in a series
of tranches is certainly detracting from its appeal."
Here in the United Kingdom, the government seizure of Bradford & Bingley –
a major player in "buy-to-let" investment mortgages – sent London's
banking sector plunging as the Chancellor, Alistair Darling, told the BBC that
its competitors will now have to fund the shortfall in state-guaranteed
insurance of deposit accounts.
The second nationalization of a UK bank in 12 months emptied the government's
Financial Compensation Scheme of £12 billion ($21.5bn) – and required an extra
£4bn from the Treasury – to smooth the sale of B&B's deposit business to
Santander of Spain.
On the currency markets today, the British Pound tumbled to its worst intra-day
losses since 1993, down almost 5¢ vs. the Dollar to a one-week low of $1.7960.
The Gold
Price in Sterling leapt to a fresh six-month high, up 3.6% in morning trade
to stand just 4% off its all-time high of £512 an ounce, reached in mid-March
this year.
For French, German and Italian investors, the price of Gold
gained 2.9% from Friday's close – touching €619 an ounce as the single currency
dropped 1.3% vs. the Dollar – after the near-failure of Belgian-based Eurozone
giant, Fortis.
The governments of Belgium, Netherlands and Luxembourg pumped €11.2 billion
into the banking and insurance group, taking a 49% stake in return.
Germany's second-largest commercial real estate lender, Hypo Real Estate,
secured a fresh line of €35 billion in government and emergency bank credit.
Its stock sank 61% on the news.
The Icelandic Krona dumped almost 7% against the US Dollar after the Reykjavik
government bought a 75% stake of Glitnir, the country's third-largest bank.
America's sixth-largest bank, Wachovia, was said by the New York Times to be
seeking a sale to Citigroup or Wells Fargo.
"Institutional investors and private banks in particular will all be
reconsidering their strategy. My belief is they are likely to want to own some
gold again," said Jeremy Charles, head of precious metals trading at HSBC
and chairman of London
Bullion Market Association, to Reuters earlier.
Speaking at the LBMA's annual conference – this year held in Kyoto, Japan –
Charles told the newswire that he sees only a 10% potential drop in Gold Prices right now,
with " far greater potential on the upside.
Pointing to the Gold
Coin Shortage that's hit retail gold investors worldwide since July,
"the [soaring] premiums around the world tell a big story to me," he
went on.
"The recent dip in the Gold
Price has created massive demand from the retail investors."
Meantime in the paper promises of Gold Futures and
options, speculative gold traders are being forced to close their positions due
to the dearth of credit and surging financing costs.
Open interest in Comex gold contracts shrank by 6.5% in the week to last
Tuesday, according to US regulator the Commodities Futures Trading Comission
(CFTC).
The latest data also shows that hedge funds and other "large
speculators" – hit by soaring financing costs and margin requirements as
financial credit dries up – grew their long positions by just 6% as the price
leapt $110 per ounce between 15th and 22nd Sept.
Previously taking their most "bearish" stance overall so far this
decade early this month, hedge-fund and institutional traders were forced to
slash their short position by a massive 37% as the Gold Price jumped from
$780 to $890 an ounce.
Published on Mon, Sep 29 2008, 12:44 GMT
BullionVault
| 2 King Street Cloisters, London W6 0GY
http://www.bullionvault.com/ | info@bullionvault.com
Index Recommended Levels by FXtechtrade
Tue, Nov 24 2009, 06:07 GMT
Technical Market Commentary - Technical Market Commentary by India Forex Advisors
Tue, Nov 24 2009, 05:58 GMT
The Mid-Day Minute - Upside Targets for Gold by MPTrader.com
Tue, Nov 24 2009, 05:42 GMT
Currency Trading News - US Dollar, Japanese Yen Slump as 10% Rise in US Home Sales Stokes Risk Appetite by DailyFX
Tue, Nov 24 2009, 05:35 GMT
The Energy Report - Poor Mans Gold by Alaron
Tue, Nov 24 2009, 05:31 GMT
Gold steady despite rising greenback
Forex Live | Tue, Nov 24 2009, 03:47 GMT
Emerging Market Central Banks Have Scope To Buy More Gold -BlueGold
Dow Jones | Tue, Nov 24 2009, 02:51 GMT
Distressed Sales Of Global Commercial Property Up In 3Q - RICS
Dow Jones | Tue, Nov 24 2009, 00:01 GMT
Forex: Dollar falls on Monday; Stocks rally in Wall Street and Europe
FXstreet.com | Mon, Nov 23 2009, 21:58 GMT
US Existing Home Sales rise 10.1% to 6.1M in Oct
FXstreet.com | Mon, Nov 23 2009, 15:01 GMT
GET CASH BACK FOR YOUR TRADES! Learn more about the Pip Rebate Program