Gold price slid 2.5% Thursday morning, declining $60.20 to $1,815 per ounce

The gold price slid 2.5% Thursday morning, declining $60.20 to $1,815 per ounce. After trading to a new all-time high early yesterday, the price of gold has plunged $92 over the past 30 hours. Cyclically-sensitive assets climbed higher with stock prices rising 1% as measured by the most actively traded S&P 500 futures contract. Oil rose 1% to $85.90 per barrel while copper gained 1.1% to $4.12 per pound.

Speculation that President Obama will announce an economic stimulus package at a press conference tomorrow helped buoy stocks and commodities. The U.S. dollar, which has rallied for six consecutive days as measured by the U.S. Dollar Index (DXY), moved lower versus its foreign counterparts.Weakness in the gold price yesterday was fueled in part by a relatively rare occurrence in recent months – an encouraging piece of U.S. economic data. The ISM services index for August rose to 53.3, north of the 51.0 consensus estimate among economists. The better than expected report helped calm fears – at least temporarily – that the U.S. economy is headed toward another recession.

Analysts at HSBC thought as much, where in a note to clients they wrote that “Central banks have shifted to exchange rate policy aiming to have the weakest currency in town. This is a game that everyone can’t win… but that doesn’t mean they won’t keep trying…One currency that will benefit most from this is the one that will not complain, gold.”

Long-time gold bull and Dow Theory Letters author Richard Russell offered a similar comment recently. “The Russell opinion is that we’re seeing the slow but inevitable end of fiat irredeemable money,” he wrote. “Gold will be the last man standing. Even the central banks have reversed their gold-having stand and are now buying gold”.

Russell went on to assert that “Gold is the true money that no central bank can print. No wonder sophisticated investors accumulate it…The prescription that central banks offer is to keep printing their garbage-money. The world is beginning to understand.”

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