Gold News

Gold steadies ahead of Asian open

Gold steadied as New York closed and the electronic session moved towards the open in Sydney and Asia.

Euro and Yen gold prices ended Thursday sharply higher, but gold dipped for Dollar and Sterling investors after frantic action on the currency markets caused by a shock hike in UK interest rates to 5.25% by the Bank of England.

Instantly the Pound leapt to an 18-month high vs. the Euro above €1.500. It also touched $1.954 vs. the Dollar, a one-week high.

But the good news for UK investors looking to buy gold proved short-lived. The Old Lady's surprise vote – only 1 economist out of 50 polled by Reuters last week said she would hike – pushed gold £2 lower to £314, only for gold to recover its losses as the Dollar price shot to $616. It dropped back to end the day in London at $612.50 per ounce.

That's the highest gold price since Friday last week, the day gold dropped $30 per ounce. Sterling's strength may prove short-lived, but today's interest-rate vote hasn't done the price of gold any harm so far. (To read more about the outlook for Sterling, and its impact on the gold market, click here now...)

Meantime, the European Central Bank yesterday failed to take any heat out of its own credit and monetary growth bubble. The ECB kept Eurozone rates at 3.5%, despite the supply of Euros rising by nearly 10% year-on-year.

The currency markets will now be watching for Friday's slew of US data – including retail sales plus import and export prices for Dec. and business inventories for Nov.

The US Treasury will also give its budget numbers for last month. Consensus on Wall Street expects a $24bn surplus. But whether the US government slows its borrowing or not, the supply of gold – famous as the "anti-Dollar" – remains tight.

News came Thursday that South African gold output fell 7.6% in volume terms during November. Production of non-gold minerals rose 4.8%.

If you haven't yet added gold to your portfolio during the setback starting last Friday, you may wish to click here and learn more about buying and storing gold in Zurich, New York or London today.

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.

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