Gold climbed as much as $54.98 to $1,878.90, a new all-time high

The gold price soared to a new series of record highs on Friday as sovereign debt and recession worries continue to pressure Wall Street. The spot price of gold climbed as much as $54.98 to $1,878.90, a new all-time high, before paring its gains prior to the open of U.S. equity markets. The SPDR Gold Trust (GLD), the most liquid gold price proxy in the equity markets, surged $2.58 to $180.30 per share in pre-market activity. COMEX gold futures, per the December contract, hit a new record of $1,881.40 per ounce earlier this morning.

A primary catalyst for strength in the gold price has been escalating concerns over the European sovereign debt and banking crises. Yesterday, the Wall Street Journal reported that U.S. regulators were elevating their scrutiny of European banks’ liquidity, while a Swedish regulatory agency warned banks that they should do take additional measures to prepare for a funding crisis. Data from the European Central Bank on Wednesday also revealed that an unnamed financial institution borrowed $500 million from a dollar facility that had not been utilized for several months.

These developments have led to widespread selling in European markets. However, the euro currency has held up relatively well, at least against the U.S. dollar. On Friday morning, the euro climbed 0.5% to 1.4409 against the dollar.

In the U.S., disappointing economic data has continued to roll in, sparking fears of a renewed recession. Yesterday, weekly jobless claims came in modestly above expectations, at 408,000 versus the 400,000 consensus estimate among economists. Existing homes sales were reported at 4.67 million, below the 4.87 million expected. While those two data points were disappointing, they were dwarfed by the Philadelphia Fed Index, a key gauge of manufacturing activity. At negative 30.7, the Index missed the 1.0 consensus estimate among economists by a huge margin.


Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more