Gold News

Gold Undoes This Week's Gain in Dollars as Harrods Launches Physical Gold, Scrap Supplies "Cap Rally"

Gold Prices fell hard early Thursday, retreating 2% from yesterday's new record high to unwind all of this week's gains-to-date for Dollar investors.

European shares ticked lower and New York equity futures pointed down after the Dow Jones index closed last night above the 10,000 level for the first time in 12 months.

Government bonds also fell, pushing yields up to 3.28% on 10-year German bunds.

US crude oil contracts held steady at $75 per barrel.

"At current price levels, there is little appetite in the Physical Gold market," reports Standard Bank in its daily note.

"Scrap selling continues, which is adding to the resistance at $1070."

Forecasting a Gold Price of $1,200 by year-end, Douglas Horn of New York's CPM consultancy group told an audience in Singapore today that "Investors perceive gold as an asset class to hedge against [economic] volatilities.

"In the past years, we used to see retail investors coming to the market to Buy Gold," Horn's quoted by Bloomberg, "but now we're seeing a large scale of institutional investors participating in the gold market.

"That's a significant change."

Back in Thursday's early gold action, the price for Euro investors fell 2.3% from Tuesday's high – its best level since mid-March – to trade at €704 an ounce by lunchtime in London.

Gold priced in Sterling also fell to a two-week low, down to £645 an ounce, as the Pound rose sharply on the currency market following comments from a Bank of England executive.

"Personally I feel much more confident now that the asset purchase programme is having the scale and speed of impact that we would have hoped for when we started," said the Bank of England's director for markets, Paul Fisher, in an interview with the Financial Times published today.

The UK's quantitative easing – now equal to the government's entire deficit for 2009 to date – is "still only seven months in," Fisher added, "so it is still very early days." (Feeling Queasy yet...?)

Meantime in New York, US securities giant Goldman Sachs posted even better-than-expected third quarter results, almost tripling its common-stock dividend from the same period last year.

Staff compensation was 78% greater again than the money paid out to stock holders, equal to nearly half the former investment bank's total revenue.

Over in Hong Kong, a Chinese buyer set a new world record for real-estate prices, paying $57 million for a duplex apartment.

Here in London, luxury department store Harrods began selling Gold Coins and bars in its famous Knightsbridge store, telling the press that "The financial environment has kindled a new demand for physical gold among private investors in Britain.

"Harrods saw the opportunity to help individuals Buy Physical Gold in a prudent manner."

Harrods' new gold department told BullionVault by phone today that its premium on Krugerrand gold coins is currently set 11% above spot price – twice the average mark-up already charged by typical US and European dealers.

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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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