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London
Gold Market Report
THE
PRICE OF GOLD fell sharply on Thursday morning in
London, losing 2% from yesterday's new record high to unwind all of the
week's gains-so-far for Dollar investors.
European shares ticked lower and New York equity futures pointed down after
the Dow Jones index closed last night above the 10,000 level for the first
time in 12 months.
Government bonds also fell, pushing yields up to 3.28% on 10-year German
bunds.
US crude oil contracts held steady at $75 per barrel.
"At current price levels, there is little appetite in the physical gold
market," reports Standard Bank in its daily note.
"Scrap selling continues, which is adding to the resistance at
$1070."
Forecasting a gold price of $1200 by year-end, however, Douglas Horn of New
York's CPM consultancy group told an audience in Singapore today that
"Investors perceive gold as an asset class to hedge against [economic]
volatilities.
"In the past years, we used to see retail investors coming to the market
to buy gold," Horn's quoted by Bloomberg, "but now we're seeing a
large scale of institutional investors participating in the gold market.
"That's a significant change."
Back in Thursday's early gold action, the price for Euro investors fell 2.3%
from Tuesday's high – its best level since mid-March – to trade
at €704 an ounce by lunchtime in London.
Gold priced in Sterling also fell to a two-week low, down to £645 an
ounce, as the Pound rose sharply on the currency market following comments
from a Bank of England executive.
"Personally I feel much more confident now that the asset purchase
programme is having the scale and speed of impact that we would have hoped
for when we started," said the Bank of England's director for markets,
Paul Fisher, in an interview with the Financial
Times published today.
The UK's quantitative easing – now equal to the government's entire
deficit for 2009 to date – is "still only seven months in,"
Fisher added, "so it is still very early days."
Meantime in New York, US securities giant Goldman Sachs posted even
better-than-expected third quarter results, almost tripling its common-stock
dividend from the same period last year.
Staff compensation was 78% greater again than the money paid out to stock
holders, equal to nearly half the former investment bank's total revenue.
Over in Hong Kong, a Chinese buyer set a new world record for real-estate
prices, paying $57 million for a duplex apartment.
Back here in London, luxury department store Harrods began selling gold coins
and bars in its famous Knightsbridge store, telling reporters that "The
financial environment has kindled a new demand for physical gold among
private investors in Britain.
"Harrods saw the opportunity to help individuals buy physical gold in a
prudent manner."
Harrods' new gold department told BullionVault by phone today that its premium on Krugerrand gold coins is
currently set 11% above spot price – more than twice the average mark-up
already paid by retail investors using typical US and European coin dealers.
Adrian
Ash
Head of Research
Bullionvault.com
Also
by Adrian Ash
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.
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