From Adrian Ash<\/p>\n
BullionVault<\/a><\/p>\n As Stocks Fall, US Fed “Likely” to Extend Money-Creation<\/strong><\/p>\n <\/strong><\/p>\n \nTHE PRICE GOLD <\/strong>fell $10 an ounce from Thursday’s new 7-week high in light wholesale dealing today, nearing the weekend 1% up from last Friday as world stock markets extended their drop.<\/p>\n \nGovernment debt prices rose, pushing two-year US yields down to new all-time lows as the Japanese Yen flirted again with a 15-year high to the Dollar.<\/p>\n \nCrude oil struggled below $75 per barrel. Silver prices gave back the last of the week’s gains, trading down to $18.12 per ounce.<\/p>\n \n“After years of being long, [we now] see gold as vulnerable to central bank inactivity in the face of rising deflation risk,” Goldman Sachs’ Market Pulse team advised a select group of institutional clients this week.<\/p>\n \nLast week, Goldman Sachs’ commodities analysts publicly raised their 2010 price-target to $1300 an ounce.<\/p>\n \nThe investment bank’s Market Pulse<\/em> advice \u2013 not intended for the general public, but posted on the ZeroHedge site \u2013 jars however with its own stated view that the US Fed “is likely to resume quantitative easing” before the end of 2010.<\/p>\n \nMore central-bank money creation “is possible,” says Standard Bank’s chief forex strategist Steve Barrow today, “and is not a source of future strength” for developed-world currencies.”<\/p>\n \n“We’ve long held the view that liquidity (not necessarily inflation) drives commodity prices higher,” writes Barrow’s colleague Walter de Wet, “and gold benefits the most from this effect.”<\/p>\n \nPeaking after the first wave of quantitative easing in July 2009, the US money supply “is again trending higher,” says Standard Bank’s senior commodity analyst.<\/p>\n \n“We view this as a positive sign, especially for gold.”<\/p>\n \nAfter Thursday’s weak US jobs and business figures sent New York stocks sharply lower in thin trade, economic data releases were confined today to Canada, where the Consumer Price Index showed its second month-on-month fall in succession for July.<\/p>\n \nThe Canadian Dollar fell on the news, helping the CAD gold price hit its best level since 1 July at $1292 per ounce.<\/p>\n \nThe British Pound meantime dropped out of this week’s tight trading range, pushing the gold price in Sterling up to a five-week high of \u00a3796 an ounce.<\/p>\n \nThe Euro also fell hard, dropping to a 7-week low against the Japanese Yen and slipping below $1.27 in Dollars.<\/p>\n \nEurozone investors wanting to buy gold today saw the price rise to its highest level since 2 July above \u20ac31,180 per kilo.<\/p>\n \nAdrian Ash<\/p>\n BullionVault<\/a><\/p>\n Gold price chart, no delay<\/a> |\u00a0\u00a0 Buy gold online at live prices<\/a><\/p>\n Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash<\/strong> is the editor of Gold News<\/a> and head of research at BullionVault<\/a> \u2013 winner of the Queen’s Award for Enterprise Innovation, 2009 \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n