Sunday, September 19, 2010
By Richard Evans (UK Telegraph): Gold struck fresh record highs on Friday as the dollar waned on mounting expectations that the Federal Reserve will pump more money into the flagging US economy.
Neil MacKinnon, an analyst at VTB Capital, told AFP: "Gold is making a new high and stocks are rallying because the markets think the Fed will print more money before the end of this year just to ensure that the US economy remains on an even keel.
"The risk for investors is that the US economy does actually fall into a 'double-dip' [recession] and not the 'soft landing scenario' which the markets are currently discounting."
Gold struck an all-time high close to $1,283 an ounce on Friday after chalking up a series of records this week. It hit $1,282.97 on the London Bullion Market before easing slightly to stand at $1,280.95.
"Traditionally we see investors flocking to gold in times of market troubles, but this relationship is out the window this week as inflation concerns, expectations for further quantitative easing from the Federal Reserve and technical triggers have driven [the gold price up]," said analysts at the trading group Spead Co.
Marcus Grubb, managing director of investment at the World Gold Council, said: "The gold price hit a new all-time high again today against a sluggish economic backdrop and uncertain public finances in Europe and the United States.
"The continued strength of the Chinese economy leading to a gold enhancing appreciation in the Renminbi against the US dollar has spurred the market."
He added that, following the purchase of 10 tonnes of gold from the International Monetary Fund by the central bank of Bangladesh last week, rumours abounded of official sector buyers coming into the market.
"Gold is clearly in focus as a reserve asset in the current macro and financial climate," he said. "The news that AngloGold Ashanti, Africa's largest gold producer, has raised $1.53bn through a share and convertible issue to cancel gold hedges also represents a strong vote of confidence in the market."
In a recent survey by Bloomberg, the average of analysts' predictions for the gold price was $1,500.
By Ambrose Evans-Pritchard: US Treasury Secretary Tim Geithner has issued his harshest attack to date on China’s currency policy, the latest move in an escalating superpower clash across the gamut of commercial and strategic relations.
“We are very concerned about the negative impact of (China’s) policies on our economic interests,” he told a Congressional hearing on Beijing’s use of exchange intervention for trade advantage.
“The pace of appreciation has been to slow. The undervalued renminbi helps China’s export sector. It encourages out-sourcing of production and jobs from the United States. By continuing a rigid exchange rate, China is impeding the adjustments needed to secure sustainable global growth,” he said.....read on
(Reuters) - Gold hit a record high on Friday for the third time this week as poor U.S. consumer confidence and market talk of more quantitative easing helped the alternative asset score its biggest weekly gain since May.
The metal received a boost from data showing Thailand raised its gold holdings by a fifth in July through open-market purchases, joining a growing list of Asian nations diversifying into gold amid volatility in other markets.
Silver rose to just below $21 an ounce, approaching levels not seen since 1980 as gold's rally triggered further investor speculation that the white metal would continue a winning streak that began in August.
"Gold continues to reflect the overall level of concern. The weak consumer confidence data was certainly supportive to the rally in gold," said Frank McGhee, head of precious metals trading at Integrated Brokerage Services in Chicago.
Gold surged to an all-time peak of $1,282.75 an ounce in the European session on expectations that the U.S. Federal Reserve, hoping to stave off double-dip recession, could announce more quantitative easing -- usually a boon for gold.
After some profit-taking, the yellow metal turned higher again after data showed consumer sentiment worsened in early September to its weakest in more than a year. Another report indicated little underlying U.S. inflationary pressure.
Spot gold fetched $1,275.50 an ounce at 3:11 p.m. EDT (2011 GMT), compared with $1,272.20 late in New York on Thursday. It has gained more than $100, nearly 9 percent, since the start of August.
U.S. December futures settled up $3.70 at $1,277.50 an ounce.
On charts, gold remained well within a long-term rising channel dating to late 2008, and technical buying could propel the metal further above record highs, analysts said.
Gold's safe-haven status increased on renewed sovereign debt worries in Ireland, after a report said Irish banks might need a bailout, but Ireland's finance ministry said there was no truth to the claim.
Foreign-exchange volatility also boosted gold's appeal as an alternative currency. Japan intervened this week to weaken the yen for the first time in six years and the United States sharpened its tone on China's currency policy.
"It's partly a currency move. There's certainly investor nervousness about monetary policy around the world since the yen intervention," precious metals strategist Matthew Turner of Mitsubishi Corp said.
The euro fell as European debt worries and the weak U.S. consumer data enhanced the dollar's safe-haven appeal, while fear of more Japanese intervention kept the yen near a one-month low against the U.S. currency.
Dollar sentiment overall has been damaged by speculation that the Fed could announce more quantitative easing when it meets on Tuesday.
SEASONAL DEMAND; SILVER OUTPERFORMS
September and October are typically strong periods for jewelry demand, with a number of major gold-buying festivals near the year-end in top consumer India, while Western manufacturers stock up ahead of Christmas.
Eclipsing gold's rally, silver has gained 5 percent this week, double the yellow metal's 2.5 percent increase. Spot silver was up 0.1 percent at $20.74 an ounce from $20.72 in New York on Thursday.
"The last few months, silver has been benefiting as a monetary metal like gold, when things are looking bad, and as an industrial metal when things are looking good," Mitsubishi's Turner added.
However, technical analysis suggests silver is overbought and could be due a correction.
"Silver is renowned for overshooting and undershooting. In my opinion, that kind of rate of increase can't be sustained. I would not be recommending anyone to get long or longer silver at $21," Credit Suisse analyst Tom Kendall said.
Spot platinum hit $1,630 an ounce, its highest since May 19. It rose to $1,611.50 from $1,603.65 on Thursday and palladium fell to $540.50 an ounce from $544.65.
By Jason Hamlin: Gold fever is converting an increasing number of mainstream investors into gold bugs. Newbies who were fortunate enough to buy gold at any point during this year are no doubt celebrating their gains. And many are looking to take profits now that gold has made another record (nominal) high at $1,279. After all, the gold price has enjoyed an advance of nearly $100 during the past month and we are probably facing some profit taking and correction, right?
Not exactly. The first thing to consider is that while gold has just made a new record nominal high, the price is still nowhere near the inflation-adjusted high of $2,500 to $5,000, depending on whether you use true or manufactured (government) inflation statistics. Secondly, the $100 advance in the past month represents a gain of only 8%, versus the last major upleg which lasted 3 months and registered a gain of more than 26%.....read on
By Abigail F. Doolittle: With gold hitting a historic high this past Tuesday only to have it taken out yesterday, I thought it might be timely to take a look at another precious metal on the move: silver.
Specifically, do the charts and the basic fundamentals support the sense that silver is set to continue its recent run as well? And perhaps more tantalizing, is there any evidence that points to the idea that silver can take out its more than thirty-year-old record high of roughly $50 per ounce?
Based on a scrubbing of the charts and the fundamentals, I am more inclined than not to believe that silver's future may look like gold......read on