Gold News

Gold Weekly Review 10 February 2012

Gold Prices down on week...

Recorded 10 February 2012


Transcript from 10 February 2012, written by Ben Traynor

Gold recorded its first weekly loss of 2012 on Friday. The PM London Fix price came in at $1711.50 an ounce, a 1.3% fall from last Friday.

Silver also fell this week, although Friday's fix price of $33.55 an ounce represented a smaller percentage fall than gold's.

Greek politicians spent most of this week negotiating among themselves over spending cuts. On Thursday they presented their agreed package to a meeting of Eurozone finance ministers, who promptly rejected it as insufficient. Gold fell on Friday to its lowest level since 25 January. You may recall, that was the day that Federal Reserve policymakers confirmed they do not expect to raise interest rates until at least the end of 2014. 

On Thursday, The European Central Bank voted to keep its main policy rate at 1%. It did however change the rules on the collateral that banks can post against their ECB borrowing. The change means that banks should now be able to borrow funds against a wider range of assets. ECB president Mario Draghi agreed that the central bank is taking on more risk, but said that this risk is being "well managed".

Like the ECB, the Bank of England also kept its interest rate on hold. It did however vote in favor of an additional £50 billion of quantitative easing. Since the Bank began QE three years ago, inflation has regularly exceeded the Bank's 2% target.

Analysis by BullionVault shows that the average British household has seen its bank account savings lose around £1800 in purchasing power as a result of this excess inflation. Over the same period, Sterling Gold Prices have risen nearly 70%.

China imported 428 tonnes of gold from Hong Kong last year, according to official figures published on Monday. This is more than three times the amount it imported in 2010. China's gold imports from Hong Kong are generally seen as a good proxy for overall imports.

Next week sees the release of the latest UK inflation figures, as well as the Bank of England's Inflation Report.

The G20 group of the world's largest economies meanwhile meet on Friday, where world leaders are expected to discuss the issue of pledging more money to the International Monetary Fund.

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Editor of Gold News and presenter of BullionVault 's weekly gold market summary on YouTube from 2011 to 2013, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

See full archive of Ben Traynor articles.

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