Gold News

Gold rises even as US, Tokyo and Singapore shut

Gold has climbed to $640 an ounce and above today even as Tokyo, Singapore and Wall Street have been closed for business.

Gold rose for a sixth session running in Asia, before holding onto its gains in the European session. Electronic trading on CME Globex in the US has seen gold climb nearly $4 for the day.

The sharpest gains have come for Dollar and Yen investors, as Sterling and the Euro have continued to rise on the foreign exchange market. Both the ECB and Bank of England are expected to raise interest rates again soon, either at their policy meetings next week or early in February.

US rates have paid better returns since the summer of '06, but speculators have still driven Euros and Sterling higher in anticipation. Today the Pound hit a new 8-year high against the Japanese Yen. By the opening in London, its strength meant the rise in gold had been capped for Sterling investors at £325 per oz.

The trade-off between British Pounds and Japanese Yen is just one example of the worldwide "carry trade". Professional investors borrow money that's charging low interest rates. Then they invest in a higher-rate currency.

And right now the Yen costs barely 0.25% per year. The Pound pays 5.0%. Simple, no?

But the size of the carry trade...and the clever new financial instruments that have been dreamt up to capitalise on it...might give you pause for thought today. To read the full story now, click here...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are 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. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals