LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
Gold Recovers One-Third of "Summer Slump"; No New Mining Supply Below $1,200 per Oz



-- Posted Thursday, 28 August 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com

London Gold Market Report

from Adrian Ash

 

THE SPOT PRICE OF GOLD BULLION rose yet again in London on Thursday, touching $840 an ounce just ahead of the Wall Street open and recovering almost one-third of the 21% plunge witnessed since mid-July.

"Gold is still capped by the big resistance at $846," reckons Peter Tse at Scotia Mocatta in Hong Kong, speaking earlier to Reuters.


"I don't think much will happen ahead of the long US [Labor Day] weekend."

Longer-term, however, the Gold Price is set to reach $850 within the next month and print $900 an ounce by November, believes John Reade – the highly respected head of metals trading at UBS in London.

First, global Demand for Physical Gold has been "unprecedented" over the last three weeks, Reade told his clients this morning. Second, the hot-money froth of hedge funds trading gold futures and options has also come off now that "Substantial Long Liquidation has occurred."

As for the US currency's 10% bounce vs. the Euro of the last five weeks – seen by several analysts as a key driver of Gold's sharp losses this summer – "the Dollar appears to have topped out for now," says Reade.

This morning in London the Euro reached $1.4790, more than 2’ above Tuesday's six-month low.

 

The Gold Price in Euros rose faster still, however, jumping 1% to a fresh two-week high of €568 per ounce.

"We had these [supply] problems three months ago," said Wolfgang Wrzesniok-Rossbach of precious-metals refinery Heraeus on Wednesday, "but the price was still high.

"Now the Gold Prices are much lower, this is why people have come in and invested their money in gold."

Heraeus says its customers – mainly industrial and jewelry manufacturers – are waiting up to two weeks for delivery. Private investors in Europe and North America continue to face a Gold Coins Shortage.

And over in India – destination for one ounce in every five sold worldwide last year – the "demand destruction" sparked by record-high Gold Prices this spring is fast being reversed according to the World Gold Council's local office.

"For this year so far," said WGC director Dharmesh Sodah to Sify.com this morning, "gold has seen its lowest prices in the past few days, resulting in high sales.

"Jewelers in Gujarat and Maharashtra are optimistic about Guru Pushya Nakshatra," he added, pointing to today's Hindu festival – an "auspicious time to Buy Gold," according to Jayanti Patel of the Tanishq jewelry brand, now with 91 stores in 64 cities.

India's annual gold consumption rose 42% between 1996 and 2007, hitting 722 tonnes last year.

On the other side of the Gold Market, however, gold mining companies hoping to meet this surge in global demand continue to struggle.

"The margins between costs and the Gold Price are shrinking," noted Nick Goodwin, an analyst at T-Sec in Johannesburg, to Reuters today, "as the companies try to dig out a wasting asset.

"This is not an easy business."

South Africa's Gold Fields Ltd. – the world's fourth-largest gold miner – paid a total of $869 per ounce of production in the April-June period. The CEO, Nick Holland, says he wants to cut this "all-in cost" to $725 by March '09.

After forecasting a Gold Price of $1,500 earlier this month, Holland told Creamer's Mining Weekly on Monday that "there’s not enough money today to replace the infrastructure that exists today at Gold Fields.

"If you tried to build these mines today, you would need a $2,000 price and higher to justify the investment.

"Replacement costs of all of the operations [mean] you could not recoup your investment today at these prices. You could not build these facilities today anywhere."

Mining-stock analyst Ian Henderson, manager of the $5-billion Natural Resources Fund at J.P.Morgan, told Reuters yesterday that Gold "should have a sustained price level of over $1,200 an ounce before we see any significant new mine build.

"Gold mining is a very complicated and expensive business and you really need to see the Gold Price a lot higher before you see any increase in gold production."

 

Adrian Ash

 

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

 

(c) BullionVault 2008

 

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.


-- Posted Thursday, 28 August 2008 | Digg This Article | Source: GoldSeek.com




 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.