Gold News

Gold hits 5-day high as US bond prices retreat

Spot Gold Prices hit a 5-day high in early New York trade on Wednesday, breaking above $660 per ounce as European stocks closed more than 1% higher, but US equities pulled back after strong initial gains.

"Investor sentiment is recovering this morning, with European equities higher, the US Dollar weaker and credit spreads narrower," said Michael Jansen, an analyst at J.P. Morgan, to AFX.

Comex gold futures for Dec. '07 rose above $671 per ounce, a three-session high, as the Euro spiked to $1.3550 in the currency market, and the Pound Sterling rose by more than a cent to $1.9920.

The Dollar's decline on the foreign exchange market helped keep the Euro Price of Gold just north of €488 per ounce. For British investors wanting to Buy Gold Today, the price was capped at £332 per ounce by the London close.

"The gold price has stabilized, and the market has flushed out all the speculators," reckons Marty McNeill, a trader at New York's R.F. Lafferty Inc.

"With the Dollar down, gold may go up." (But is the Gold Market really that simple? Download a free 16-page report exploding Five Myths of the Gold Market here...)

In the US Treasury market, the huge inflows of 'safe haven' money seen on Black Monday this week retreated, pushing bond yields sharply higher. Two-year US bond yields rose 15 points to 4.15% by lunchtime in New York. Ten-year yields climbed 7 points to 4.65%.

As bond prices slipped and yields rose, futures traders reduced their bet that the US Federal Reserve will cut its rates futures at its next policy meeting, Sept. 18th. The likelihood of a "desperate remedy" move from the current 5.25% to 4.75% in one fell swoop dropped from seven-in-ten to six-in-ten.

"The big story is that during last week's roller-coaster ride in the equity markets, people got scared into Treasuries and not metals like silver and gold, which are traditionally believed to be safe-haven investments," notes Ralph Preston, a senior market analyst at Heritage West Financial in San Diego, to Bloomberg. "Technically, gold and silver look weak."

But just because the world's largest financial institutions fled into Treasury bonds, that doesn't make US government debt – nor the US Dollar itself – a safe place for your money today.

These are the very organizations whose high-risk lending and credit strategies created this month's "crunch" in the world's equity and money markets.

If you'd like to hedge your exposure to both the US government's promises, as well as the mountain of complex, high-risk debt obligations now stacked up on Wall Street, you may wish to consider an allocation to physical gold bullion.

A solid, tangible asset that's been used as a genuine store of value for more than 3,000 years, gold owned in your name alone would be nobody's promise – and no one's to devalue through inflation.

You can claim a free gram of professional-grade gold by visiting BullionVault now...

Adrian Ash

Adrian Ash, BullionVault Gold News

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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