-- Posted Tuesday, 18 October 2011 | | Disqus
Gold is trading at USD 1,657.30, EUR 1,212.10, GBP 1,054.00, JPY 127,093.00, AUD 1,634.70 and CNY 10,574 per ounce. Gold’s London AM fix this morning was USD 1,658.00, GBP 1,054.64 and EUR 1,211.19 per ounce. Yesterday’s AM fix was USD 1,689.00, GBP 1,069.33 and EUR 1,217.64 per ounce.
Cross Currency Table
Gold has fallen in all currencies today as equity and commodity markets have seen weakness due to concerns about Chinese economic growth after China's economy eased somewhat. Germany’s pouring cold water on the likelihood of a speedy resolution of the euro zone's debt crisis at the summit this weekend has also increased market jitters.
Gold continues to be correlated with equities in the short term but we are confident that this correlation is short term in nature and the inverse correlation between gold and equities and bonds will again be seen in the medium and long term.
Gold priced in euros has fallen less than other currencies as the euro has fallen against most currencies today on concerns about the debt crisis and after another fall in German investor confidence.
Peripheral European debt markets are showing weakness again. The recent trend of falling yields appears to have ended which is worrying. Should yields begin to rise again this should create added safe haven demand for gold.
UK inflation rose to match a record high of 5.2% (CPI) and retail price inflation (RPI), a measure of the cost of living used in wage negotiations, accelerated to 5.6% (from 5.2%), the highest since June 1991.
The figures were again worse than expected by the BoE, economists and many economic experts who have been underestimating the threat of inflation for some time.
The BoE, like the Federal Reserve, continues to follow an ultra loose monetary policy in an effort to boost an economy teetering on the brink of a double dip recession.
Second quarter UK Gross Domestic Product (GDP) shocked the markets by showing a disappointing 0.1% growth in the economy, down from a 0.2% increase in the first quarter.
The UK appears to be entering stagflation with declining economic growth and stubbornly high inflation seeming increasingly likely. Whether stagflation becomes as intractable and long lasting as was seen in the 1970’s remains to be seen but it would be foolish to completely ignore the risk of stagflation – both in the UK and in most debt saturated western economies.
Given the macroeconomic backdrop, the case for owning gold as part of a diversified portfolio remains strong.
Slow global growth and the risk of a global recession, ultra low interest rates and increasing inflation in most markets means that owning gold remains prudent.
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NEWS
(Reuters) -- Gold edges down as risk assets retreat
http://www.reuters.com/article/2011/10/18/us-markets-precious-idUSTRE78M11C20111018
(Reuters) -- Gold slides after German data dents euro
http://www.reuters.com/article/2011/10/18/markets-gold-idUSL5E7LI1A920111018
(MarketWatch) -- Gold ends lower on data, euro zone woes
http://www.marketwatch.com/story/gold-futures-waver-but-hold-above-1680-2011-10-17?link=MW_latest_news
(The Street) -- Gold Prices Held Back by Europe, Strong Dollar TheStreet.com
http://www.thestreet.com/story/11278937/1/gold-prices-held-back-by-europe-strong-dollar.html
(Barron’s) -- Gold Wavers, Silver Falls As Dollar Climbs Amid Europe's Debt Woes
http://blogs.barrons.com/focusonfunds/2011/10/17/gold-wavers-silver-falls-as-dollar-climbs-europes-leaders-scramble-for-a-fix/?mod=BOLBlog
COMMENTARY
(WashingtonPost) -- Bloomberg Video: Hong Kong Bourse Starts Trading Gold Quoted in Yuan
http://www.washingtonpost.com/business/hong-kong-bourse-starts-trading-gold-quoted-in-yuan/2011/10/17/gIQAk9pvsL_video.html
(King World News) -- James Turk - Insolvency of Banks to Cause Gold Explosion
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/17_James_Turk_-_Insolvency_of_Banks_to_Cause_Gold_Explosion.html
(GoldSeek) -- Gold and Economic Decline
http://news.goldseek.com/GoldSeek/1318873767.php
(ZeroHedge) -- Deutsche Bank Warns France May Be Put On Downgrade Review Before Year End
http://www.zerohedge.com/news/deutsche-bank-warns-france-may-be-put-downgrade-review-year-end
GoldCore
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-- Posted Tuesday, 18 October 2011 | Digg This Article
| Source: GoldSeek.com
