New Greek crisis 'biggest risk for gold'
Source: , Author: Ben Traynor
Posted: Wed February 22, 2012 4:09 pm

INTERNATIONAL. US DOLLAR gold prices held steady just off US$1,760 an ounce during Wednesday morning trading in London, after a rally in Tuesday's US session saw gold climb 1.3%.

Silver prices softened slightly but held above US$34 per ounce – having through that level on Tuesday following the Greek bailout announcement. Stocks and commodities edged lower this morning, while government bond prices gained.

Gold prices "[ran] into sell stops at the $1760 level," says one gold dealer here in London.
"We don't see a substantial amount of enquiries in the physical market," adds Dick Poon, Hong Kong-based precious metals manager at refiner Heraeus.

However, "a break of US$1763 will bring in fresh buying," reckons the latest technical analysis from bullion bank Scotia Mocatta, "looking for a test of November high US$1803."

Greece has been given nine days to meet a list of conditions before it can receive its €130 billion agreed by Eurozone finance ministers yesterday. The list includes sacking underperforming tax collectors and readying state-owned companies for privatization in the summer, the Financial Times reports.

"The [Greek] deal may have removed near-term uncertainty," adds Helen Roberts, head of government bonds at F&C Asset Management in London, "[but] it's a hard environment to implement austerity measures. It's a worry that the Greek government might not be able to do much even though they are fully committed to the agreement."

"The greatest risk to the downside that we see for gold is a fresh Greek crisis," warns HSBC precious metals analyst James Steel.

Here in London, two members of the Bank of England's Monetary Policy Committee voted against its decision to expand its quantitative easing program by £50 billion earlier this month, while the remaining seven voted in favor, minutes published Wednesday show.

David Miles and Adam Posen both voted in favor of a larger increase of £75 billion, which would have taken the total size of asset purchases to £350 billion.

"This leaves the door open for more QE," reckons Victoria Cadman, London-based economist at Investec.

"We're looking for another £50 billion in May, and after that we don't see any more as the economy picks up in the second half [of 2012]."

In a speech in Scotland yesterday, Bank of England deputy governor Charlie Bean acknowledged that "the current extended period of rock-bottom interest rates has impacted heavily on those holding most of their savings in deposit or short-term savings accounts, who have seen negative real returns."

Bean added, however, that while the" side effects" of QE "may be unpalatable...treatment is invariably better than the alternative".

Sterling gold prices hit an eleven-week high at £1119 per ounce Wednesday morning, as the Pound fell on the currency markets.

The gold price in Yen meantime moved to within 5% of last September's all-time high today, touching ¥140,971 per ounce, as the Dollar hit its highest level against the Japanese currency since last July.

Like the Bank of England, the Bank of Japan also expanded its quantitative easing program earlier this month.

Growth in Germany's manufacturing sector has slowed this month, according to provisional purchasing managers index data published Wednesday. German manufacturing PMI fell to 50.1 – down from 51.0 last month (a figure above 50 indicates expansion).

Across the Eurozone as a whole, provisional manufacturing PMI rose from 48.8 in January to 49.0.
Over in China – the world's largest gold bullion consumer in the fourth quarter of last year – flash PMI data compiled by HSBC.

Investment banking giant Goldman Sachs repeated its bullish view on gold prices Wednesday.

"We expect US real interest rates to remain lower for longer given our US economics team's expectation for US economic growth to remain slow through 2012," said a note from the bank.

"Consequently, we expect gold prices to continue to rise through 2012, reaching US$1,940 an ounce in 12 months, and we continue to recommend a long gold position."

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

Buy gold online at live prices.

For more information, please visit BullionVault.

(c) BullionVault 2012

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.


Goldman Sachs lowers commodity return forecast, sees gains in oil and gold

Gold and other commodities rally on Greek debt deal, Iran and China

Outcome of Greek saga will impact gold price next week, says ENBD report

China to overtake India as top gold buyer, says WGC

Commodities: Gold runs out of steam, energy benefits from cold

What is driving gold prices higher?

Will the Chinese continue to buy gold?

James Rickards sees gold standard at US$7,000 per ounce in the face of a dollar collapse

The Gold Price and the inevitable mischief caused by cheap-money love

'Gold is way too cheap,' says James Turk

Wood, Trees & Gold

Gold to gain, copper 'favored' in 2012, says Morgan Stanley

Gold panic in China?

Peter Schiff: Was 2011 the end of the gold rush?

Marc Faber, Jim Rogers clash over China and commodities, agree on gold



date:Posted: November 20, 2014
INTERNATIONAL. The trajectory of Japan's economy has much to teach us about the wisdom of Keynesian policies. Those who are not blinded by left-wing dogma should take a good look at where the road of permanent stimulus ultimately leads.
date:Posted: November 20, 2014
INTERNATIONAL. The path to the acceptance of the participatory approach to development was forged, through trial and error, over several decades until the 1990s, when its global recognition by development practitioners became well-established.
date:Posted: November 20, 2014
INTERNATIONAL. There is a high degree of uncertainty over how the Iranian negotiations and the OPEC meeting will play out, but the end of November will be hugely important for energy markets.
INTERNATIONAL. Both countries posted freedom scores of 8.1, according to the annual Economic Freedom of the Arab World report published by the Fraser Institute. Bahrain dropped from first place last year to third place and a score of 8.0 in this year's report, which is based on 2012 data, the most recent available.