Gold News

Gold Price Rises to 4-Day High as Global Stock Markets Rally; Case for Banking Bail-Outs Now "Evident" Says IMF

 

Gold
Prices
jumped to a four-session high above $918 per ounce in
London trade early Monday, rising 0.5% from last week’s close as
crude oil rose 1% and world stock markets ticked higher.

"With
the US Dollar continuing to weaken and crude oil pretty well
supported, there's a need for an inflationary hedge and more people
are shifting to commodities including Gold,"
said Ellison Chu, the head of precious metals trading for Standard
Bank Asia in Hong Kong, to Bloomberg this morning.

But for
short-term direction, "there are no fresh data cues until the
Federal Reserve [policy] minutes on Tuesday," notes Kishore
Narne of Anand Rathi Commodities in Mumbai.

Notes from the
Fed’s last policy meeting – when it cut Dollar interest rates by
0.75% – are due at 13:00 EST tomorrow. Thursday brings new
interest-rate decisions from the European Central Bank in Frankfurt
and the Bank of England in London.

But caught between rising
inflation and the global banking crisis – which now presents an
"evident" case for public intervention according to Dominic
Strauss-Kahn, head of the International Monetary Fund – neither the
ECB or BoE is expected to change the cost of money.

"Gold
Prices
at this level represent good value and I do think we are
going to see more demand from Asia," reckons Jonathan Barratt,
head of Commodity Broking Services in Sydney.

"For kilo
bars, we are seeing a shortage and a premium running at about 40
cents per kilo [in Asia] and we anticipate that to move up to 75
cents in the next few months."

Today the Australian stock
market added 0.3% despite a broad rise in Asian-Pacific stocks after
the country's third-largest bank, ANZ, sank on news it had to raise
bad-debt provisions by 71% in the six months to end-March.

On
the data front, Australia's exports fell 4% and imports were
unchanged in Feb. from Jan., taking the country’s trade deficit to
A$3.29 billion (US$3bn). Analysts had expected only three-quarters
that gap.

Tokyo gold futures meantime neared Monday’s close
up 1.1% at ¥3,042 per gram – equal to $922.65 per ounce for
Feb. ‘09 delivery – as the Japanese Yen slipped back towards a
three-week low on the currency market.

That also boosted
Japanese export shares, pushing the Nikkei stock index 1.2% higher to
a five-week high as brokerage shares also rose alongside metal and
oil prices.

Hong Kong stocks rose 1.1%, helped by a 10% surge
in Zijin Mining, China’s largest gold-mining group. Today it
announced a $1.4bn public offering on the Shanghai stock exchange –
plus a further 10% enlargement of its Hong Kong listing – to raise
funds for new acquisitions overseas.

Zijin had previously
dropped 42% of its value since the start of 2008, falling sharply
alongside the Hong Kong market despite a near 50% uplift in reported
earnings.

Gold
Prices
in India ticked lower to 11,840 Rupees per 10 grams –
down from last month’s new all-time peaks above R13,000 – as the
Sensex measure of Bombay stocks added 2%.

A committee set up
by the government’s Planning Commission and chaired by former IMF
chief economist Raghuram Rajan said today that the Reserve Bank of
India should make controlling inflation its single objective.

The
annual inflation rate rose to 7% in the week-ending 22nd March
according to official data, the worst rate since Dec. 2004.

The
Sensex remained almost 25% below its starting level for
2008.

European stocks rose 0.8% by lunchtime in Frankfurt
after finishing their best week in more than 12 months according to
Reuters data. Over on the currency markets the Euro recovered of an
early one cent loss to reach $1.5700 on news of strong German
industrial output in Feb.

The British Pound dipped almost two
cents from Friday’s high to reach $1.9870, pushing the Gold
Price in British Pounds
just above £462 per ounce. For
French, German and Italian investors looking to Buy
Gold
today, the price reached its best level since Monday last
week €585 per ounce.

Over in New York, meantime, the latest
CFTC data showed professional and private investors sharply cutting
their leveraged bets on Gold
Market
futures in the week-ending April 1st.

The net
balance of bullish contracts held by gold futures traders dropped by
8%. April Fool’s Day then saw world Gold
Prices
slump more than 3% to a 10-week low of $875 per ounce.

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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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