The gold price
Gold rises for UK and Euro investors as US growth slows - 21 December 2006
Sterling had earlier regained the six-and-half year highs it hit on a trade-weighted basis on Wednesday, before selling off in thin dealing. Profit-taking knocked the Pound 1.5 cents lower by lunchtime in London to $1.956, despite third quarter UK economic growth being revised up to 2.9% year-on-year – the fastest pace in two years.
"It suggests that the [UK] economy is growing quite well," said Daragh Maher, senior currency strategist at Calyon, taking the government's revision at face value. "But the difficulty for Sterling is that a rate hike in February is pretty much priced in now."
Meantime in the US, economic growth slowed to 2% in the third quarter said Washington today, pulled down by the fastest drop in new home building since 1991. That would suggest no hike in interest rates – or at least no cuts – from the Fed in early 2007. Yet the Dollar has pushed back gold, Sterling and the Euro so far today.
Trade is very thin in all markets, however. "As most players have moved into holiday mode price movements are likely to become more flow driven as Christmas approaches," said one metals strategist in a note today.
Should investors interested in gold move into holiday mode, too? Click here to discover the true cost of gifts for the family this Christmas...
Adrian Ash runs the research desk at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern and FT Deutschland; Italy's Il Sole 24 Ore, and many other respected finance publications.
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