Gold Prices Jump as Russia Vows to Stay in Ukraine, Stock markets Slump, China's Trading Volume Hits 3-Month High

[The Machine]

 

 

GOLD PRICES jumped Monday morning as traders got their first chance to respond to the weekend's events in Ukraine and China.

 

Surging to $1350 per ounce by the start of London trade, gold prices then eased $5 lower as European stock markets fell hard.

 

The EuroStoxx 50 dropped 2.7% by lunchtime, while Ukraine's neighbors Poland and Hungary saw their stock markets lose 4.7% and 5.5% respectively.

 

Slovakia's Bratislava stock exchange didn't open for business.

 

"We expect safe haven demand to wane," says a 2014 gold prices outlook from ABN Amro, "because of an overall improvement in investor climate and continued low inflation."

 

"The gold advance is running out of steam," said Bank of America Merrill Lynch in a note late last week, forecasting "a top and bearish turn in trend" around $1351.

 

"The weekly chart looks bullish," counters the latest technical analysis from London market maker ScotiaMoccata's New York desk.

 

With Russia's foreign minister vowing Monday morning that his troops will remain in the Ukraine's Crimea region, defending against "ultra-nationalist threats" despite Western demands to quit, Moscow's top 50 blue-chip stocks dropped 11% this morning, and the Russian Rouble fell to new all-time lows against both the Dollar and Euro.

 

Reuters reported rumors that Moscow today spent $10 billion trying to buoy its currency.

 

As news reports said Russian troops also continued to operate at Ukraine's eastern border, Chicago wheat contracts rose 5.2%, and copper hit a 3-month low.

 

Major Western government bond prices rose further, pushing 10-year US Treasury yields down to 3-month lows at 2.60%.

 

Silver more than doubled the spike in gold prices, adding 2.8% at the top to touch a 3-day high of $21.70 per ounce before dropping just as quickly to $21.45.

 

Meantime on the Shanghai Gold Exchange, and after the weekend's terrorist knife attack in Kunming, south-west China, trading volume in the most active gold contract today jumped to CNY 12.1 billion, its highest level since 21st November.

 

But prices on the Shanghai Gold Exchange again fell to a discount to London settlement, repeating the pattern of last week as the Yuan fell to new 3-month lows on the currency market.

 

"It is not only ETF investors who have rediscovered the merits of gold in recent weeks," says a note from Germany's Commerzbank, referring to the halt in sales of gold from exchange-traded trust funds which totaled 880 tonnes last year, equal to almost one-third of world mine supply.

 

"Speculative financial investors are also betting more on rising gold prices again" through US futures, says Commerzbank, noting how latest regulatory data show "net long positions expanded by 40% [last week] to a 13-month high."

 

But calling speculative positioning "frothy" and "over-extended", Swiss investment and bullion bank UBS warns that "the substantial increase in a relatively short span of time raises the potential for a short-term washout once geo-political risks dampen."

 

UBS also notes, however, that the rise in speculators' net long positioning came "mostly on short covering", with hedge funds and other speculative players cutting their bearish bets by 26% and growing their bullish bets by only 1.6% from the week before.

[tamiflyer]

 

 

 

GOLD PRICES jumped Monday morning as traders got their first chance to respond to the weekend's events in Ukraine and China.

 

Surging to $1350 per ounce by the start of London trade, gold prices then eased $5 lower as European stock markets fell hard.

 

The EuroStoxx 50 dropped 2.7% by lunchtime, while Ukraine's neighbors Poland and Hungary saw their stock markets lose 4.7% and 5.5% respectively.

 

Slovakia's Bratislava stock exchange didn't open for business.

 

"We expect safe haven demand to wane," says a 2014 gold prices outlook from ABN Amro, "because of an overall improvement in investor climate and continued low inflation."

 

"The gold advance is running out of steam," said Bank of America Merrill Lynch in a note late last week, forecasting "a top and bearish turn in trend" around $1351.

 

"The weekly chart looks bullish," counters the latest technical analysis from London market maker ScotiaMoccata's New York desk.

 

With Russia's foreign minister vowing Monday morning that his troops will remain in the Ukraine's Crimea region, defending against "ultra-nationalist threats" despite Western demands to quit, Moscow's top 50 blue-chip stocks dropped 11% this morning, and the Russian Rouble fell to new all-time lows against both the Dollar and Euro.

 

Reuters reported rumors that Moscow today spent $10 billion trying to buoy its currency.

 

As news reports said Russian troops also continued to operate at Ukraine's eastern border, Chicago wheat contracts rose 5.2%, and copper hit a 3-month low.

 

Major Western government bond prices rose further, pushing 10-year US Treasury yields down to 3-month lows at 2.60%.

 

Silver more than doubled the spike in gold prices, adding 2.8% at the top to touch a 3-day high of $21.70 per ounce before dropping just as quickly to $21.45.

 

Meantime on the Shanghai Gold Exchange, and after the weekend's terrorist knife attack in Kunming, south-west China, trading volume in the most active gold contract today jumped to CNY 12.1 billion, its highest level since 21st November.

 

But prices on the Shanghai Gold Exchange again fell to a discount to London settlement, repeating the pattern of last week as the Yuan fell to new 3-month lows on the currency market.

 

"It is not only ETF investors who have rediscovered the merits of gold in recent weeks," says a note from Germany's Commerzbank, referring to the halt in sales of gold from exchange-traded trust funds which totaled 880 tonnes last year, equal to almost one-third of world mine supply.

 

"Speculative financial investors are also betting more on rising gold prices again" through US futures, says Commerzbank, noting how latest regulatory data show "net long positions expanded by 40% [last week] to a 13-month high."

 

But calling speculative positioning "frothy" and "over-extended", Swiss investment and bullion bank UBS warns that "the substantial increase in a relatively short span of time raises the potential for a short-term washout once geo-political risks dampen."

 

UBS also notes, however, that the rise in speculators' net long positioning came "mostly on short covering", with hedge funds and other speculative players cutting their bearish bets by 26% and growing their bullish bets by only 1.6% from the week before.

 

Hi Machine.  How are you?

 

IMMHO, fiat currencies will "Always fall" when gold goes up.  Nature of the beast!  Thanks for your post.  Good luck to you and all.  Go RV.

[The Machine]

Hi Machine.  How are you?

 

IMMHO, fiat currencies will "Always fall" when gold goes up.  Nature of the beast!  Thanks for your post.  Good luck to you and all.  Go RV.

 

just to clarify gold doesn't go up or down it's inerrant value is constant, it's value in relation to fiat currencies fluctuates constantly , but keep in mind it's the currency's that are fluctuating not gold.

 

Not many people actually get this but it is fact.

 

When it looks like Gold is going up in value it is always in relation to something like fiat currency or barrels of oil or grain etc. gold's value is constant its everything else that changes in value.

 

So when gold is going up in value in relation to dollars ....... it doesn't mean gold is worth more ..... it means your dollars are worth less as gold is a constant. so if you need more dollars to buy the same amount of gold that was cheaper the day before then your dollar value has decreased.

 

so to correct your statement gold in relation to dollars is going up because the value of the dollar is falling not "fiat currencies will "Always fall" when gold goes up".

[tamiflyer]

just to clarify gold doesn't go up or down it's inerrant value is constant, it's value in relation to fiat currencies fluctuates constantly , but keep in mind it's the currency's that are fluctuating not gold.

 

Not many people actually get this but it is fact.

 

When it looks like Gold is going up in value it is always in relation to something like fiat currency or barrels of oil or grain etc. gold's value is constant its everything else that changes in value.

 

So when gold is going up in value in relation to dollars ....... it doesn't mean gold is worth more ..... it means your dollars are worth less as gold is a constant. so if you need more dollars to buy the same amount of gold that was cheaper the day before then your dollar value has decreased.

 

so to correct your statement gold in relation to dollars is going up because the value of the dollar is falling not "fiat currencies will "Always fall" when gold goes up".

I agree partially with you.  The parts that I disagree are when gold, since the beginning of it being a currency, it well has appreciated spontaneously.  The other is the not registered gold, like the one from the world wars that changed sides and it is not registered.  Examples would be Sumatra gold, Yamashita gold, mostly Asian gold that is still missing in the books but surely is available for purchase at a 30 percent premium discount, since it's missing and not registered.   This 30% has to go somewhere.  Enough said.  Thanks Machine for all that you do.  GLTY and all.  Go RV.

[The Machine]

gold has not appreciated over time it's still worth the same think about it this way  ....... a thousand years ago (give or take) 1 ounce of gold bought a good suit of armor ...... today an ounce of gold will but a good tailored suit.

 

it's still worth the same it's the value of all other goods in relation to gold that has depreciated due to man made inflation, as inflation does not affect gold it's everything else that changes in relation to gold. So dollar comparison values go up but the inherent value of gold is still the same.   

I don't know where your going with the unregistered gold ..... I'm not following your train of thought on that one.

 

If I was to dig in my garden tomorrow and find 1000 tonnes of gold it's not going to affect the value of world gold prices in dollar terms  ..... so missing or hidden gold isnt a factor in pricing.

[tamiflyer]

There is over 5% of the worlds gold that is missing since the early 1900's that was accounted for.  What I am saying is that this gold had value before, it was accounted for, therefore, it was holding a place in value in the world.  Money has been lost and it's slowly showing up at 30% discount, since it was either stolen, melted, ect and it is not registered now.  It's been missing for so long that most folks who are in the know don't want to find it, just sell it!  Now, do you get my point?  I do understand your thoughts on everything else around gold appreciating or depreciating.  IMMHO, this is semantics.  What makes me believe on value must express consumption.  This is my thought!  If I need it, I will use it.  If I don't need it, then, you know what.  There are too many factors, on my mind to believe that gold does not fluctuates.  Semantics again, "Gold's luster's is another's value!" and you may quote me on this!    Too many other metals that exist that have similar usable intrinsic value that would make gold just stay put, monetarily speaking.   Thank you Machine.  I always appreciate your thoughts and input.  I still want to do business with you once this RV hist.    GLTY and all.  Go RV,

[gymrat76541]

It's the Ukraine for gosh sacks........................the only thing they produce are terrorist.