|
|
London Gold Market Report
THE PRICE OF WHOLESALE gold bullion jumped above $1500 per
ounce in London on Wednesday, setting new Dollar and Sterling highs but
falling sharply against the Euro as the single currency rose to its highest
level since 2009.
World stock markets surged almost 2% on average, as news of
stronger-than-expected US corporate earnings came alongside a fresh rumor of Greek-debt "restructuring" from a
German official.
"[While] it doesn't have to mean an actual default, I fear that Greece
can't get out of this situation without some kind of restructuring,"
said Chancellor Merkel's economic advisor Lars Feld to Deutschlandfunk
radio.
The price of Greek government bonds fell yet again, driving yields up to new
post-Euro highs, while Portuguese government bond yields also jumped to fresh
post-union records above 9% per year.
The wholesale price of gold bullion in Euros slipped, however, trading 1.8%
below Monday night's 4-month high.
Italian policy-maker and former Goldman Sachs executive Mario Draghi – already endorsed by the Financial Times
and Economist magazine – was meantime tipped in the Wall
Street Journal today by an anonymous source "close" to German
finance minister Wolfgang Schauble as the likely
replacement for Frenchman Jean-Claude Trichet when
he steps down as European Central Bank president in October.
Minutes released in London by the Bank of England showed its policymakers
agreeing that "demand and activity had probably been to the
downside" when they voted a fortnight ago to hold UK base rates below
the pace of inflation for the 17th month running.
For US interest rates, "The market is now pricing in just a...one-third
chance that the Fed will begin tightening at the January 2012 meeting,"
says the FT's Alphaville blog, citing
Bloomberg data, "and is estimating less than a 50% probability that
tightening will start even at the March 2012 meeting."
"There are not a great deal of reasons to sell
gold at the moment," Reuters quotes Darren Heathcote
at Investec Australia.
"Given that few countries in the world appear to be in a sound fiscal
state nowadays," says Tetsu Emori at the Astmax Co. fund
managers in Tokyo, "the focus is all the more put on safety, as reflected
in the strength in gold not only in Dollar but non-Dollar currencies."
Looking ahead to the scheduled end of the Federal Reserve's current $600
billion Treasury-bond purchases in June, "The very fact that net supply
of new debt and bank lending has been weak," says Deutsche Bank's
Dominic Konstam in a note, "strongly suggests
that the impact of QE2 has been a risk-asset price phenomenon and not a loan
creation phenomenon.
"In other words, broken bank balance-sheets have simply allowed for the
crowding out of Treasuries into limited-risk assets with price gains more
exaggerated than they would have been in an economy with a well-functioning
banking system."
"Silver prices remain very strong, but seem to have run ahead of the
fundamentals," says bullion bank Scotia Mocatta's
latest Metal Matters monthly.
With silver setting its 8th new 31-year high in 13 trading days so far in
April, "If gold corrects expect silver to follow," says Scotia.
"Longer-term [gold] investors generally seem comfortable to hold their
existing positions...[yet] the level of interest is
low considering how much uncertainty there is in the market and how weak the
Dollar has been."
Following last week's news that the University of Texas' endowment managers
have switched from a derivatives to physical allocated gold position,
"One of the most interesting highlights is the massive growth in
physical gold bar investment," writes David Wilson at French bank Societe Generale, commenting on
the 66% jump in gold-bar sales reported by the GFMS consultancy for full-year
2010 worldwide.
Adrian Ash
Head of
Research
Bullionvault.com
You can also Receive your first gram of Gold free by opening an
account with Bullion Vault : Click here.
City correspondent for The Daily Reckoning in London, Adrian Ash is
head of research at BullionVault.com – giving you direct access to investment
gold, vaulted in Zurich, on $3 spreads and 0.8% dealing fees.
Please Note: This article is
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.
|
|
