By Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n \nAgainst Rallying Dollar as Margins Hiked<\/strong><\/p>\n \nTHE PRICE OF GOLD<\/strong> fell for the sixth session running vs. the Dollar in Asian and London trade on Tuesday, dropping to a near-two week low as the US currency rose and global stock markets fell hard.<\/p>\n \nThe\u00a0Gold Price in Euros<\/a>, Sterling and Japanese Yen also slipped, but lost just 0.5% from last week’s finishes.<\/p>\n \nBroad commodity indices lost more than1% as crude oil futures dropped back to $83.50 per barrel.<\/p>\n \nThe\u00a0Silver Price<\/a> fell to $25.35 per ounce, some 14% off last Tuesday’s 30-year record high, after the Chicago Mercantile Exchange raised margin requirements on leveraged silver traders for the second time in a week.<\/p>\n \nThe CME also raised Gold Futures margins by 5.9%, effective close-of-play today.<\/p>\n \n\u201cGold had accelerated away from the uptrend line, but…is pulling back again from an overbought condition,\u201d writes Phil Smith at Reuters Technical in Beijing today.<\/p>\n \n\u201cThe usual negative correlation with the Dollar is back in place, and [long-term] the Dollar is moving steadily to the downside.\u201d<\/p>\n \n\u201cWhile we still think that the overall environment, characterized by quantitative easing and inflation concerns, remains bullish for the precious metals, we wouldn\u2019t rule out further long liquidation in the immediate term,\u201dsays Swiss refinery group MKS’s finance division, \u201cwith the Dollar’s strength creating a barrier to further gains for the time being.\u201d<\/p>\n \nLatest data from US regulator the Commodity Futures Trading Commission, delayed until last night by Veteran’s Day, showed both speculative and commercial\u201cindustry-insider\u201d traders bucking recent trends and reverting to type as the gold and Silver hit new record levels last Tuesday.<\/p>\n \nSpeculative traders raised their bullish bets, while commercial traders grew their net-bearish position.<\/p>\n \n\u201cAt some unknown point, easy money turns into excess leverage, reduced deflation risk becomes inflation fear, fiscal stimulus becomes sovereign credit risk,” says J.P.Morgan’s asset-allocation group in a recent note, quoted by the Wall Street Journal.<\/p>\n \n“We can’t tell where this turn comes, but history warns us it tends to happen suddenly and violently. As investors, you can’t always focus on tail risk, but it makes sense to tilt portfolios toward them.”<\/p>\n \nNew data today showed US factory-gate prices falling unexpectedly in October from Sept., while Capacity Utilization was also weak and Industrial Production growth flat.<\/p>\n \nOver in the UK, new data showed consumer price inflation rising to 3.2% annually in October, forcing Bank of England governor Mervyn King to write an open letter to the government, explaining why inflation is more than one percentage point above his official target once again.<\/p>\n \nAgain, King blames January’s VAT tax rise, plus global commodity and UK import prices. Again, he promises to \u201cstand ready to act\u201d – with interest rates still at 0.5% for19 months running, the longest period of inaction since Bank Rate was\u201cthrown in the bin\u201d (as one academic historian put it) for 20 years after the Great Depression at 2.0%.<\/p>\n \nAgain, and despite warning that inflation \u201cis expected to remain above target for a year or so…indeed, [it] may rise further,\u201d King cites \u201ca margin of spare capacity\u201d which will bring inflation back below target \u201cin the medium term\u201d.<\/p>\n \nReal interest rates for UK savers \u2013after inflation \u2013 haven’t been this negative since 1978, with the\u00a0Gold Price in Sterling<\/a> rising 163% since the Northern Rock banking run of three years ago.<\/p>\n \nUS interest rates, accounting for CPI inflation, have now been sub-zero \u2013 meaning a real loss of purchasing power for savers \u2013 in 58 months since 2002. The 1970ssaw negative real rates in 61 months in total.<\/p>\n \nAdrian Ash<\/p>\n \nBullionVault<\/a><\/p>\n \nGold price chart, no delay<\/a> |\u00a0\u00a0 Buy gold online at live prices<\/a><\/p>\n \nFormerly 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 and now backed by the mining-sector’s World Gold Council<\/a> research body \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n