Gold News

Gold ends unchanged in London as tech-stocks join US bonds as "safe haven"

Spot Gold Prices closed London trade little changed for the day at $666.50 per ounce on Thursday, as government bond prices continued to rise. Stock markets were mixed.

"There's too much uncertainty out there," reckons Marty McNeill at R.F. Lafferty in New York. "Investors are questioning everything. Right now, they're going to sacrifice better yields for safety."

But people are finding "safety" in the strangest places, and "instead of speculating on gold, they'll go to [US] Treasuries," McNeill said to Bloomberg. Other professional traders pushed the Nasdaq tech-stock index 0.6% higher today in thin trade ahead of the long Labor Day weekend, as the broader S&P index slipped lower by lunchtime in New York.

"Technology is looked at as a good safe-haven right now," said one Connecticut broker. "If you're going to have equity exposure, what you're seeing is people come out of the financials into technology for the past six weeks."

Meantime in Europe, the FTSE index of Britain's 100 largest companies staged a late rally to add 1.3% for the day – a gain matched by the CAC in Paris. The Euro ended the day in Frankfurt slightly higher at $1.3650. The British Pound also recovered to $2.0170 after dropping more than one-and-a-half cents on news that an unnamed London institution had tapped the Bank of England for an emergency loan worth $3.2 billion.

Britain's money supply grew at 13% year-on-year in July, the BoE also revealed on Thursday, ahead of June's pace, but the Sterling Price of Gold still pulled back despite this news to end the London session below £331 per ounce.

US economic growth for the second quarter was reported at 4.0% annualized, just shy of consensus forecasts. Initial jobless claims totaled 334,000 in the week-ending Aug. 25th, ahead of the previous week's 325,000. Tomorrow brings US personal income and spending data at 12:30 EST.

"Most of the clients I speak to at the moment are interested in minimizing positions, minimizing risk," said John Reade, head of precious metals UBS in London to Reuters earlier, "and [they] are only trading when they have to.

"I think this is a good price to be long gold, but I am not quite sure what's going to make it move up in the short term. We should start to see more demand coming into the Gold Market soon on the gold side. If that starts to come through that might encourage people to add to some long positions."

In the currency markets the Japanese Yen held at ¥115.90 per Dollar after gaining 0.7% overnight – and adding 1.6% against the Aussie Dollar – when Basis Capital Fund Management, a $1-billion Australian firm, filed for bankruptcy in Sydney early today.

Basis had previously warned that subprime losses in one of its funds could exceed 80%.

To read more about the ongoing credit crunch affecting investors in all markets across the world – plus what it might mean for longer-term gold prices – click below now...

Read: "The Gathering Storm"

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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