{"id":24405,"date":"2011-10-11T09:08:19","date_gmt":"2011-10-11T13:08:19","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=24405"},"modified":"2011-10-11T09:08:19","modified_gmt":"2011-10-11T13:08:19","slug":"gold-falls-back-from-two-week-high-euro-meeting-delay-will-enable-comprehensive-strategy-paulson-gold-fund-underperforms-gold","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/10\/11\/gold-falls-back-from-two-week-high-euro-meeting-delay-will-enable-comprehensive-strategy-paulson-gold-fund-underperforms-gold\/","title":{"rendered":"Gold Falls Back from Two-Week High, Euro Meeting Delay “Will Enable Comprehensive Strategy”, Paulson Gold Fund Underperforms Gold"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nTuesday 11 October, 08:30 EDT<\/strong><\/p>\n

THE SPOT MARKET\u00a0gold price\u00a0fell to $1655 an ounce Tuesday morning in London \u2013 a gain of 1% for the week so far \u2013 while stocks and commodities were mostly flat ahead of a Slovakian parliament vote that could potentially jeopardize efforts to tackle the Eurozone debt crisis.<\/p>\n

Earlier on Tuesday the\u00a0gold price\u00a0hit its highest level in over a fortnight at $1685.<\/p>\n

“The [gold] market is starting to show some price sensitivity around the current level,” said one Hong Kong bullion dealer during Asian trading.<\/p>\n

“Volumes remain light with little conviction evident in the precious metals markets,” agrees Marc Ground, commodities strategist at Standard Bank.<\/p>\n

“We don’t expect a strong push higher today…[but] strong support around $1650 from physical buying is still very much in place, which should protect gold from significant downside.”<\/p>\n

The Hong Kong dealer reports sales of contracts for ‘four nines’ gold \u2013 which is 99.99% pure \u2013 came close to hitting a new record on the Shanghai Gold Exchange yesterday, as traders returned from China’s National Day Golden Week last week.<\/p>\n

“This super strong post Golden Week sales figure implies a very upbeat Q4 2011 and Q1 2012 physical market,” he says, adding that peak sales volumes are normally hit around January or February.<\/p>\n

Silver prices\u00a0meantime fell to $31.42 \u2013 down from $32.54, but still a 0.8% gain on the week.<\/p>\n

Following a four-day rally, European stock markets traded sideways Tuesday morning \u2013 with the FTSE showing a 0.7% loss and Germany’s DAX down 0.2% \u2013 as investors awaited a parliamentary vote that could derail Eurozone rescue plans.<\/p>\n

Slovakia’s parliament is due to vote today on whether or not to ratify the European Union agreement of July 21, which includes increasing the scope of the European Financial Stability Facility \u2013 the Eurozone’s \u20ac440 billion ad hoc bailout vehicle set up last year.<\/p>\n

The Freedom and Solidarity Party (SaS), which is one of the four members of the ruling coalition, has said Slovakia should reject the creation of the European Stability Mechanism \u2013 the permanent bailout fund due to replace the EFSF in 2013 \u2013 and has made this a condition of its agreeing to approve the July 21 agreement. SaS also wants Slovakia’s participation in any EFSF rescues to be restricted.<\/p>\n

“We are going to support countries like Italy via bond buys,” says SaS leader Richard Sulik.<\/p>\n

“We will be saving French banks holding billions in assets,” he adds, pointing out that Slovakia is one of the smallest economies in the Eurozone.<\/p>\n

Slovakia is the only Eurozone member yet to ratify the agreement, following Malta’s approval on Monday.<\/p>\n

“A rejection of the measures [by Slovakia] would probably result in a second vote being called almost immediately,” says a note from Mitsui Precious Metals this morning.<\/p>\n

“[However it] could jolt the markets and erode some of the confidence that has accumulated over the past few days.”<\/p>\n

“I don’t think [the vote] is going to be a dealbreaker,” adds James Buckley, fund manager at Baring Asset Management in London.<\/p>\n

Elsewhere in Europe, leaders have postponed by one week a crisis summit that was due begin next Monday.<\/p>\n

“Further elements are needed to address the situation in Greece, the bank recapitalization and the enhanced efficiency of stabilization tools,” explained European Council president Herman van Rompuy yesterday.<\/p>\n

“This timing will allow us to finalize our comprehensive strategy on the Euro area sovereign debt crisis.”<\/p>\n

Germany has led calls for private sector creditors, including banks, to take greater losses on their Greek debt holdings than the 21% agreed on July 21. Jean-Claude Juncker, who chairs the Eurogroup of single currency finance ministers, said this week that banks’ losses on Greek debt could be more than 60%.<\/p>\n

The European Central Bank has said it is opposed the imposition of private sector losses.<\/p>\n

“The high interconnectedness in the [European Union] financial system has led to a rapidly rising risk of significant contagion,” ECB president Jean-Claude Trichet told the European Parliament Tuesday, in his last appearance before he steps down at the end of this month.<\/p>\n

“Sovereign stress has moved from smaller economies to some of the larger countries. The crisis is systemic…it threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond.”<\/p>\n

Hedge fund investor John Paulson meantime saw his\u00a0gold investment\u00a0fund lose 16.4% of its value in September \u2013 compared to a fall of just 11% in the\u00a0gold price\u2013 according to the Wall Street Journal, which cites “people familiar with the situation”.<\/p>\n

Since the start of 2011, the WSJ reports, Paulson’s gold fund \u2013 which likely contains\u00a0gold mining\u00a0stocks as well as exposure to the metal itself \u2013 is up 1%, compared to a\u00a0gold price\u00a0gain of 16%.<\/p>\n

Ben Traynor<\/strong>
\nBullionVault<\/strong><\/p>\n

Gold value calculator \u00a0\u00a0| \u00a0\u00a0Buy gold online at live prices<\/strong><\/a><\/p>\n

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

(c) BullionVault 2011<\/p>\n

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 \u2013 and must be verified elsewhere \u2013 should you choose to act on it.<\/p>\n","protected":false},"excerpt":{"rendered":"

THE SPOT MARKET gold price fell to $1655 an ounce Tuesday morning in London \u2013 a gain of 1% for the week so far \u2013 while stocks and commodities were mostly flat ahead of a Slovakian parliament vote that could potentially jeopardize efforts to tackle the Eurozone debt crisis.<\/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-24405","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24405","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=24405"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24405\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=24405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=24405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=24405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}