Gold News

Gold Eases from New High as "Less Bad" Data Drives Up Equities, Oil & Wall Street Bonuses

The price of Gold slipped from a new record high of $1070.50 an ounce on Wednesday morning in London, retreating 0.8% as world stock markets jumped.

Crude oil shot to a 12-month high above $75 per barrel.

Both US Dollars and Japanese Yen – the "safe haven" currencies of last autumn's global banking collapse – were sold lower on the forex market.

World No.1 chipmaker Intel reported a smaller-than-expected drop in quarterly profits.

Ten-year British gilt prices fell at the fastest pace in three months following news that UK unemployment – now at a fresh 12-year record – rose less quickly than analysts forecast over the summer.

"We have yet to see any formation that suggests this up move [in Gold] is about to end," says the latest technical analysis from Scotia Mocatta.

"Our measured move target remains $1106 with trailing stop-loss now raised to $1036 on a close basis."

"If you're a believer in cycles, we're still only halfway to the all-time high for Gold Prices," said David Garofalo, CFO of Canada's Agnico-Eagle Mines Ltd, in an interview yesterday.

"The real high was $850 back in 1980, which would be about $2,300 in today's Dollars."

Australian gold-mining leader John Dow, now chairman of Troy Resources, told reports today he expects the Gold Price to trade between $1100 and $1650 an ounce from here to year-end.

Here in London today, base-metal mining giants Rio Tinto and Fresnillo both reported record output in their third-quarter earnings. Fresnillo said its silver mining production rose 9.3% during July-Oct. compared with the same period in '08.

The major US and Canadian Gold Mining firms will report their latest quarterly earnings towards the end of this month and in early Nov.

"Investors fear how much damage the US Dollar will suffer and this is in our opinion lifting gold," J.P.Morgan analysts told clients yesterday, raising their view of world No.1 miner Barrick Gold.

"We are in uncharted territory," says Tobias Merath, chief commodity researcher at Credit Suisse in Zurich, Switzerland, speaking to Bloomberg.

"You still have robust investment flows and we think gold can easily reach $1,100 an ounce. [But] most of the gold rally has been attributable to a weaker Dollar."

Touching fresh 7-month highs early Tuesday, the Gold Price in both Sterling and Euros fell hard today as both currencies rose.

Priced in British Pounds, gold dropped 2.3% from yesterday's peak to unwind this week's gains-to-date at £661 an ounce – a little over 5% below the all-time high hit in Feb. this year.

Eurozone investors now looking to Buy Gold saw the metal slip 1.2% from Tuesday's top, trading at €712 an ounce by lunchtime in London.

"I don't think this Dhanteras we will be able to get anywhere close to the 15-20 tonnes we normally sell," said Suresh Hundia, president of the Bombay Bullion Association in India to Reuters earlier, blaming current Gold Prices for a sharp drop in the subcontinent's typically strong post-harvest festive demand.

"It might fall by 75%."

On the international wholesale market, "Buying momentum spiked sharply just before we saw the last rally," reports Walter de Wet at Standard Bank today.

"[So] at this stage, gold flows indicate that the physical market is neutral – spelling a possible consolidation for gold at this level."

Center of worldwide investment trading in gold, London saw daily volumes jump last month at the fastest pace in 12 years of market data.

Professional trade-body the London Bullion Market Association said today that its members reported daily volumes equal to 20.6 million ounces (640 tonnes) on average in September.

Over in Manhattan, meantime, the top twenty US banks and securities firms are "on pace to pay their employees about $140 billion this year – a record high" according to analysis by the Wall Street Journal.

A survey of 1,000 voters conducted for the newspaper and NBC News last month found that 45% felt the stimulus package approved by Congress at the start of '09 was a "bad idea".

Only 34% of respondents now supported the package.

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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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