LONDON, Nov 11 - Gold rose to record highs above US$1,115 (RM3,791) an ounce on Monday as the dollar slid to 15-month lows, with hopes for a global economic recovery and gains in equity markets boosting the appeal of higher-yielding currencies.
Gold is poised for further gains, analysts said, with the weak dollar helping the metal build on a rally that began last week after the IMF sold 200 tonnes of bullion to India’s central bank, raising the prospect of more official sector buying.
Spot gold hit a high of US$1,117.05 an ounce and was at US$1,115.30 at 0956 GMT versus US$1,105.30 late in New York yesterday. US gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose US$13.30 to US$1,115.80.
“The way gold keeps accelerating away from its previous highs is quite incredible,” said Saxo Bank senior manager Ole Hansen. “Continued momentum is driving prices higher. Whenever we see new highs, we see more momentum buying.”
The dollar index fell a quarter of a percent to a 15-month low of 74.831 and the euro rose to a two-week peak within sight of last month’s 2009 high of just over US$1.5060.
Comments from Dallas Federal Reserve President Richard Fisher yesterday that the dollar’s depreciation has so far been orderly encouraged the market to continue betting against the US currency.
Weakness in the unit boosts gold’s appeal as an alternative asset, and makes dollar-priced commodities cheaper for holders of other currencies.
“Dollar weakness is the main trigger this morning,” said Wolfgang Wrzesniok-Rossbach, head of sales at precious metals house Heraeus.
Gold prices also rose in non-dollar terms. Euro-denominated gold reached its highest since March at €742.87.
Also helping the market was a report that Vietnam’s central bank will allow imports of gold — banned since May last year ? after bullion prices rose sharply in recent days, potentially opening up a new source of demand.
Physical gold demand was relatively slack in Asia, with traders in India — the world’s biggest bullion consumer last year ? keeping to the sidelines as prices rose.
“We did a few deals yesterday, but the market has turned quiet today. Traders are enquiring, but aren’t materialising,” said Pinakin Vyas, chief manager-treasury at IndusInd Bank in Mumbai.
Interest in gold exchange-traded funds also remained soft, with holdings of the largest bullion-backed, New York’s SPDR Gold Trust, unchanged yesterday.
But with the prospect of persistent dollar weakness boosting fund interest in gold and further central bank bullion purchases seen as a real possibility, the outlook for gold prices is seen as rosy.
US investment bank Goldman Sachs said yesterday gold could rise to record highs in a range from US$1,150 to US$1,200 an ounce, driven by falling real interest rates and renewed buying interest by central banks.
Technical analysts at Barclays Capital, who study past price movements to determine future direction, said both gold and dollar charts suggested more gains were on the cards for the precious metal. “Our sights are on US$1,500 in 2010,” they said.
Among other precious metals, spot silver was bid at US$17.53 an ounce against US$17.32, tracking gold higher, while platinum was at US$1,364 an ounce against US$1,349.50 and palladium was at US$335 against US$331.50.
ETF Securities said holdings of its London-based ETFS Physical Platinum exchange-traded commodity rose nearly 10,000 ounces or 2.6 per cent yesterday. — Reuters
Wednesday, November 11, 2009
Analyst: Another global recession likely in 2010
Wednesday November 11, 2009
HONG KONG: Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
Edwards, a prominent equities bear and a long-term critic of the policies of Western central banks, is sceptical of popular opinion that extreme policy responses will safeguard the West against a repeat of Japan’s “lost decade” of the 1990’s.
“People should question the happy clappy nonsense from sellside analysts,” London-based Edwards, a global strategist with SocGen’s Corporate & Investment Banking group, told a media briefing.
“We are not saying that people should not participate in the rallies – that will get you fired as a fund manager – but they should not become too convinced of the recovery,” he said.
Edwards is more worried about Japan in the near term as he expects the world’s second-largest economy to run into difficulty funding itself next year as demand for Japanese government bonds wane and bond yields rise further.
The significance of higher Japanese government bond yields was that it would cause some Japanese investors, who have been investing overseas in search of higher returns, to bring that money back home, he said.
Edwards expected China to go into a recession at some point as cyclicality catches up with the economy, and called people’s excessive faith in growth stories a “sick joke”.
He said while inflation was a concern, deflation was a bigger worry in the near term, at a time when Western and Japanese governments were effectively insolvent.
“If we get an economic downturn next year, when you have got core inflation at half a percent, I think there will be a real deflation panic, a bit like in Japan.”
Edwards picked grains like corn, wheat and soybeans as a more secular bet on China’s growth story over other commodities and their related stocks as these have lagged the broad rally in the markets.
“Equity valuations have been totally ridiculous for the last 10 years but I’m less bearish than I was two years ago because we have had one round of correction,” said Edwards. — Reuters
Latest business news from AP-Wire
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ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
HONG KONG: Albert Edwards, an analyst at French bank Societe Generale who correctly predicted the Asian financial crisis, sees global equity markets at a new low and chances of another global recession in 2010.
Edwards, a prominent equities bear and a long-term critic of the policies of Western central banks, is sceptical of popular opinion that extreme policy responses will safeguard the West against a repeat of Japan’s “lost decade” of the 1990’s.
“People should question the happy clappy nonsense from sellside analysts,” London-based Edwards, a global strategist with SocGen’s Corporate & Investment Banking group, told a media briefing.
“We are not saying that people should not participate in the rallies – that will get you fired as a fund manager – but they should not become too convinced of the recovery,” he said.
Edwards is more worried about Japan in the near term as he expects the world’s second-largest economy to run into difficulty funding itself next year as demand for Japanese government bonds wane and bond yields rise further.
The significance of higher Japanese government bond yields was that it would cause some Japanese investors, who have been investing overseas in search of higher returns, to bring that money back home, he said.
Edwards expected China to go into a recession at some point as cyclicality catches up with the economy, and called people’s excessive faith in growth stories a “sick joke”.
He said while inflation was a concern, deflation was a bigger worry in the near term, at a time when Western and Japanese governments were effectively insolvent.
“If we get an economic downturn next year, when you have got core inflation at half a percent, I think there will be a real deflation panic, a bit like in Japan.”
Edwards picked grains like corn, wheat and soybeans as a more secular bet on China’s growth story over other commodities and their related stocks as these have lagged the broad rally in the markets.
“Equity valuations have been totally ridiculous for the last 10 years but I’m less bearish than I was two years ago because we have had one round of correction,” said Edwards. — Reuters
Latest business news from AP-Wire
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ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
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