Gold News

Gold Shoots to Two-Week High at London Close; Investor Confidence in Paper Now "Crumbling"

Gold Prices shot 1.6% higher Friday to close the day in London above $823 per ounce – a two-week high – as Western stock markets bounced hard from this week's earlier sell-off.

Crude oil held steady above $96 per barrel, while the US Dollar regained more than 1% from a new record low on the currency markets.

"With the Dollar hitting new all-time lows [overnight], it proves supportive for gold," reckons William O'Neill at Logic Advisors in New Jersey.

"The basic uptrend in gold is going to continue."

"I don't think we are getting anywhere close to the peak in this Gold Market," agrees Graham Birch head of natural resources at BlackRock in London.

With no economic data from the US to move the markets today, those traders not extending yesterday's Thanksgiving holiday into a long weekend break were left to focus on comments from the Chinese central bank that it is, as yet, unconcerned by the vanishing Dollar.

In Europe, by contrast, the chief executive of Airbus – the world's second-largest aircraft maker after Boeing of the US – said overnight that the ongoing surge in the Euro is now "life-threatening".

Every 10¢ gain in the European single currency costs Airbus €1bn in lost sales worldwide according to EADS, its parent company.

"At $1.48 per Euro, we are already starting on the second billion," a source told the Financial Times today.

But while cutting Eurozone interest rates to make the single currency less attractive to speculators might appeal to the region's central bankers, today's inflation news from Germany may cap their response.

Import prices to the world's third-largest economy rose by 2.3% in Oct., sharply higher from Sept.'s 1.3% rate. Meantime in the United Kingdom, economic growth between July and Sept. slipped to 0.7% from the second quarter's 0.8% growth.

The British Pound slid two cents on that news to $2.0550, taking the Gold Price in Sterling above £400 per ounce at the end of London trade – a new two-week high.

For European investors wanting to Buy Gold Today, the price shot to €555 per ounce late afternoon, as the single currency held above $1.4800 after touching $1.4967 overnight.

"The banking sector crisis in the US is reverberating across many sectors and this, together with the historic high nominal price for crude oil, spells a very strong mid-term outlook for gold," says the latest Metals Monthly from Mitsui, also in London.

"At the same time, the sheer size of the futures longs in gold right now would suggest some correction might be on the cards, were it not for crumbling investor confidence in other assets."

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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.

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