Gold News

Gold Breaks New Dollar, Euro & GBP Records as "Market Targets $1200", IMF Urges Extended Stimulus Spending

The Gold Price rose against all major currencies early Monday in Asia, recording fresh all-time highs against the US Dollar, British Pound and Euro.

This morning's London Gold Fix – used as a clearing and benchmark price by major dealers and owners and set today at $1166.00, £702.41 and €778.53 per ounce – stood 293%, 284% and 171% higher respectively from this time 10 years ago.

The Gold Price in Japanese Yen hit its best level since Aug. 1983, rising above ¥3330 per gram.

"Sentiment is very upbeat and gold is looking increasingly attractive," says Stefan Graber, an analyst at Credit Suisse.

"It looks like $1200 will be seen much sooner than expected," reckons Afshin Nabavi at MKS Finance, a division of the Swiss refiners, also speaking to the BBC.

"The market would like to see $1200 today," notes a London dealer, "with [the volume of] open interest in Comex December $1200 gold calls sitting at 28,018."

The Dec. options contract expires after tonight's New York close. New data from US regulator the CFTC showed late on Friday that the total number of Gold Futures and options contracts reached an all-time record high last week.

Growing by another 5% week-on-week and swelling by more than one half since the start of Sept., the outstanding number of leveraged bets on the Gold Price traded through the Comex exchange surpassed the previous peak of Jan. 2008.

Speculative traders as a group, however, actually trimmed their bullish bets, while extending the number of "short" bearish contracts they hold.

So-called "commercial" traders acting for gold miners, refiners, bullion banks and wholesalers went in the other direction, adding new bullish contracts and cutting back on their bearish bets to give the strongest "bull ratio" as a group since August 25th.

More than 26.8% of all directional bets held by commercial industry players in US Gold Futures and options last Tuesday were for prices to rise.

"Our measured [gold] target remains 1188," says a technical note from Scotia Mocatta. "Higher highs and higher lows keep our attention to the topside.

"[Last] week's low of 1123 is seen as a support level."

"Gold has entered a seasonally bullish period," says Barclays Capital, claiming that "a long gold strategy from November 18th, taking profit on December 3rd, was a winning strategy for the past nine years.

"Such a backdrop suggests higher prices [with] channel target at $1175 into year-end."

"If gold's time is ever going to come, we are living through just such a time now," writes columnist Jonathan Davis in the Financial Times.

"Today's unprecedented economic conditions make it a sound and defensible two-way bet on the future."

World stock markets also pushed higher on Monday, nearing 2009 highs in London and Frankfurt, while crude oil rose 1% to $77 per barrel on news that Iranian forces have begun 5-days of military exercises.

The war games aim "to display Iran's combat readiness" according to Tehran's air defense chief.

Government bonds slipped in early dealing on Monday, pushing the yield offered by 10-year US Treasury debt up to 3.38%.

Analysis from deficit watchdog group Concord Coalition shows the US deficit – expected to swell by a further $9 trillion over the next decade – to be driven by interest repayments.

"In 2015 alone," reports CNN Money, "the estimated interest due – $533 billion – is equal to a third of the federal income taxes expected to be paid that year."
 
Following Friday's announcement that the European Central Bank is tightening its "credit easing" facilities to commercial banks, "It is too early for a general exit" from the Western world's huge stimulus programs, IMF chief Dominique Strauss-Kahn told a UK audience today.

"We recommend erring on the side of caution, as exiting too early is costlier than exiting too late."

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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.

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