Gold News

Gold bounces after testing a 7-week low

Gold has bounced in thin trade in Asia after closing New York for a third losing day at a 7-week low on Monday.

"Gold is rising because of the weak [US] Dollar," said a futures trader in Seoul, ignoring December's 5% drop so far. "It seems difficult for the Fed to raise interest rates as most of the economic indexes released in the US have been negative."

But the currency market doesn't care about fundamentals right now, and the Dollar held its ground once again on Monday despite very negative data.

America's trade gap widened to a record $225.6 billion in the third quarter, said Washington, up from $217.1 billion in the spring. The NAHB/Well Fargo sentiment index - a leading real estate indicator - fell to 32 this month from 33 in November. Any reading below 50 means that most US estate agents see conditions as poor.

"It's a given that US will lower interest rates next year and Dollar will trade weak," said a commodities trader in Mumbai earlier. But not even bullish gold news has helped gold prices move sharply higher today.

The World Gold Council's office in Dubai announced that local retail gold sales rose 41% between June and Sept. compared with summer last year. And this month's Dubai Shopping Festival could see sales rise 45% on 2005 levels, according to an industry expert – even though gold prices have risen dramatically year-on-year.

What might 2007 hold for gold prices? Ben Bernanke's trip to Beijing to "talk down" the Dollar last week might give you some clues – click here to find out...

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

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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