{"id":23636,"date":"2011-09-05T09:22:06","date_gmt":"2011-09-05T13:22:06","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=23636"},"modified":"2011-09-05T09:22:06","modified_gmt":"2011-09-05T13:22:06","slug":"gold-breaks-1900-again-european-woes-reclaim-center-stage-while-us-govt-sues-major-investment-banks","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/09\/05\/gold-breaks-1900-again-european-woes-reclaim-center-stage-while-us-govt-sues-major-investment-banks\/","title":{"rendered":"Gold Breaks $1900 Again, European Woes “Reclaim Center Stage” while US Govt. Sues Major Investment Banks"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nMonday 5 September, 08:00 EDT<\/strong><\/p>\n

THE U.S. DOLLAR gold price stuck its nose above $1900 an ounce Monday morning London time \u2013 its first breach of that level in nearly two weeks \u2013 before easing back towards lunchtime.<\/p>\n

The silver price, by contrast, fell to a low of $42.42 per ounce \u2013 1.9% off Friday’s close \u2013 while stocks and major commodities were also down following news of US legal action against banks and yet another election defeat for Germany’s ruling party.<\/p>\n

The FTSE was down 2.2% by lunchtime, while Germany’s DAX had lost 3.7%. Shares of European banks hit a 29-month low.<\/p>\n

“As European woes reclaim center stage…these factors will support gold in the coming weeks,” reckons Edel Tully, precious metals strategist at UBS.<\/p>\n

Service sector growth meantime slowed in Germany, the UK and the Eurozone last month, according to data published this morning.<\/p>\n

“Fears of recession [are] back on the table,” says a note from Swiss precious metals group MKS. On the currency markets the Euro slid below $1.42 before rallying, while the Euro gold price set a new all-time high of \u20ac1344 per ounce \u2013 1% above last month’s previous high.<\/p>\n

Over in Germany, Chancellor Merkel’s CDU Party lost its sixth regional election of 2011 on Sunday.<\/p>\n

“[Merkel’s defeat] simply adds to the sense that saving the Euro is going to be made more difficult by opposition from within Germany,” says Sebastien Galy, senior foreign exchange strategist at Societe Generale in London.<\/p>\n

Germany’s highest court is due to issue a verdict Wednesday on whether or not Eurozone bailouts have breached the country’s constitution.<\/p>\n

“Countries that need help are getting tired of reforms,” reckons Kimihiko Tomita, foreign exchange manager at State Street.<\/p>\n

“Countries that are paying money are getting tired of helping…the outlook of the Eurozone bailout scheme is becoming a bit shaky.”<\/p>\n

“There is a growing expectation in the market that we will have to get some policy response from the ECB at some stage,” says Standard Bank’s de Wet.<\/p>\n

“Either they will have to cut rates, or they will have to be more accommodating…whatever that will be, it is more likely to be positive for gold than not.”<\/p>\n

Over in the US, the Federal Housing Finance Agency \u2013 which oversees government-backed mortgage firms Fannie Mae and Freddie Mac \u2013 filed 17 lawsuits on Friday against major investment banks.<\/p>\n

The FHFA is suing the banks over the alleged mis-selling of $196 billion in residential mortgage back securities.<\/p>\n

Here in the UK \u2013 where the Sterling gold price also hit a new record high at \u00a31178 per ounce \u2013 there is a “strong case” for the Bank of England to focus a second round of quantitative easing on lowering banks’ high funding costs, according to a note from Kevin Daly, economist at investment bank Goldman Sachs.<\/p>\n

“However, the Bank is unlikely to choose this option, as it believes that credit market intervention of this type should be the responsibility of the fiscal authorities.”<\/p>\n

In China meantime the Shanghai Gold Exchange announced plans on Monday to raise its margin requirement on gold forward contracts for the third time in a month. The new higher margin requirements will take effect this Friday, 9 September \u2013 the day before the start of the mid-Autumn festival, which sees the SGE closed on Monday 12 September.<\/p>\n

“Given that the last margin hike sparked a $100 liquidation in gold, this could be a rare bearish issue in an environment that remains otherwise bullish for gold,” reckons a gold bullion analyst here in London.<\/p>\n

“It’s not going to have a major effect,” counters Standard Bank commodity strategist Walter de Wet interviewed by news agency Reuters.<\/p>\n

“A lot of demand we see out of Asia is physical rather than speculative.”<\/p>\n

“Margin and trading limit will revert back to normal after people come back from long holiday on 14 September,” adds a dealer in Hong Kong.<\/p>\n

Ben Traynor
\nBullionVault<\/p>\n

Gold value calculator | Buy gold online at live prices<\/strong><\/a><\/p>\n

Editor of Gold News, the analysis and investment research site from world-leading gold ownership
\nservice BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-
\nrunning investment letter. A Cambridge economics graduate, he is a professional writer and editor
\nwith a specialist interest in monetary economics.<\/p>\n

(c) BullionVault 2011<\/strong><\/span><\/a><\/p>\n

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best
\nplace for your money, and any decision you make will put your money at risk. Information or
\ndata included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013
\nshould you choose to act on it.<\/p>\n","protected":false},"excerpt":{"rendered":"

THE U.S. DOLLAR gold price stuck its nose above $1900 an ounce Monday morning London time \u2013 its first breach of that level in nearly two weeks \u2013 before easing back towards lunchtime.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-23636","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=23636"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23636\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=23636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=23636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=23636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}