FXstreet.com

0

1

London Gold Market Report

Wed, Jan 7 2009, 13:33 GMT
by Adrian Ash

BullionVault.com


Gold "On Defensive" But 2009 Investment Demand Set to Escalate as Global Depression Bites

THE PRICE OF WHOLESALE GOLD BULLION
slipped from its best Dollar-level so far this week Wednesday lunchtime in London, ticking back to $861 per ounce as European stock markets fell over 1%.

The Dollar ticked lower meantime from yesterday's 3-week highs vs. the Euro and Yen, while crude oil held above $48 per barrel.

The Gold Price in Euros slipped €10 an ounce from Tuesday's 5-week high of €643.

"With the Euro still under considerable weakness on the currency markets, plus the re-weighting of the DJ-AIG commodity index influencing sentiment, gold is certainly on the defensive this week," notes the latest Gold Investment analysis from Mitsui.

"Given how fast and furious investors piled into positions in December, it is not too surprising that some of these players are now being washed aside."

Lower interest rates from the European Central Bank (ECB) now look a certainty at next week's meeting after factory input prices across the 16-member currency union fell a record 1.9% month-on-month for Nov.

Germany today reported a sharper-than-expected rise in unemployment.

Looking further ahead for Gold in 2009, "The growing trend in wanting some gold as a store of wealth may start to snowball," noted London market-maker ScotiaMocatta early last month.

The global financial crisis seems "so deep rooted," it went on, "that demand for gold as a safe haven is expected to escalate."

Cash savings today came under fresh attack after Taiwan cut its key lending rate to 1.5%, an all-time low.

The Bank of England may cut UK rates to the same level on Thursday – a new record low in its 300-year history and precursor to Quantitative Easing.

Across the G7 leading economies, average interest rates ended 2008 at a record low of 1.25% according to Reuters analysis.

Treasury-bond investors, meantime, face a deluge of new issues in 2009 reports the Financial Times, risking a collapse in prices plus sharply higher interest rates for new government debt worldwide.

The US Treasury needs to borrow $2 trillion from the bond market this year. Eurozone governments will issue $350 billion-worth of bonds in the first quarter alone.

Wall Street stock-market futures also pointed lower on Wednesday as the private-sector ADP report for Dec. showed a record 693,000 drop in US payrolls.

Bombay's Sensex index closed more than 7% lower the chairman of I.T. firm Satyam said its balance-sheet is stuffed with "fictitious assets" and "non-existent cash".

Aluminum giant Alcoa yesterday announced a 13% cut to its workforce. Here in London today, retail bellwether Marks & Spencers announced the closure of 27 stores with the loss of 1,200 jobs.

Australian copper miner Aditya Birla Minerals says it's halting production at the Mount Gordon site – saving up to US$3 million per month – after the "significant" fall in base metal prices.

"If everything else drops by 50%, then gold's [2008] performance of 6% in Dollars and much more in other currencies is very respectable," said Dr.Marc Faber – the Swiss wealth manager and investment author now based in Thailand – to Bloomberg last night.

Today, however, "I would rather buy a basket of industrial commodities right now," he went on, "because they have fallen so fast and have greater potential to bounce."

Taiwan's latest cut to interest rates came after exports sank 42% in Dec., whacked by a record collapse in electronics shipments.

Business leaders in India fear the country could lose 10 million jobs before April as the global economic depression bites.

Brazil's industrial output sank 6.2% in Nov. from a year earlier, the official data agency said yesterday, the sharpest drop since the last recession in 2001.


Archive

BullionVault  | 2 King Street Cloisters, London W6 0GY
http://www.bullionvault.com/ | info@bullionvault.com

Legal disclaimer and risk disclosure

(c) BullionVault 2009 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.

Related reports

Market Thoughts - 24/11/2009 - The Current Market Sentiment 2 by FX Recommends
Tue, Nov 24 2009, 13:51 GMT

London Gold Market Report by BullionVault.com
Tue, Nov 24 2009, 13:32 GMT

Commodities Daily - Commodities rallied yesterday but have generally fallen back this morning by Danske Bank A/S
Tue, Nov 24 2009, 13:03 GMT

Gold Investments Market Update by GoldCore
Tue, Nov 24 2009, 12:13 GMT

Forex Daily Analysis - Forex Trading - Dollar Tumbles After Big Day on Wall Street by ForexYard
Tue, Nov 24 2009, 09:47 GMT

gold, commodities, xauusd

View All

Related content

2nd UPDATE: Asian Shrs End Lower; Shanghai Stocks Tank 3.5%
Dow Jones | Tue, Nov 24 2009, 15:25 GMT

Asian forex market wrap: don’t be happy, worry!
Forex Live | Tue, Nov 24 2009, 04:56 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

Forex: Dollar falls on Monday; Stocks rally in Wall Street and Europe
FXstreet.com | Mon, Nov 23 2009, 21:58 GMT

gold, commodities, xauusd

View All

Interested in forex trading? forex brokerage firms!


FOREX.com
Contact the broker/FDM
Open a demo account
MG Financial Group
Contact the broker/FDM
Open a demo account
Alpari (US), LLC
Contact the broker/FDM
Open a demo account
MIG INVESTMENTS SA
Contact the broker/FDM
Open a demo account
Alpari (UK) Limited
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.