Gold price expect to increase next week

Gold Prices touched $1600 per ounce Friday lunchtime in London – a 2.3% rally from this week's lows – while stocks and commodities were broadly flat on the day.

Demand for gold market continue to improve since a huge demand seen from thailand and indonesia.

Silver Prices rose to $29.96 per ounce – still 7.0% down on last week's close – while on the currency markets the Euro rallied against the Dollar despite fears that Eurozone government downgrades may be imminent.

Heading into the weekend, Dollar Gold Prices were down 6.9% for the week. Based on Gold Prices at the afternoon London Fix, the last time gold fell further in one week was the first week of December 2008.

Today's London Fix would have to come in below $1488.75 per ounce to surpass the 12.9% weekly drop in Gold Prices seen in the week ended 17 October 2008.

Nevertheless, net outflows saw the volume of Gold Bullion held to back shares in the SPDR Gold Trust (ticker: GLD) – the world's largest Gold ETF – fall yesterday by nearly 15 tonnes to just under 1280 tonnes, the biggest one day outflow by volume since August this year. (Bullion Vault)

Crude Oil Heads for Biggest Weekly Drop

Futures dropped to the lowest level in more than six weeks after Fitch Ratings lowered France’s outlook and put nations including Spain and Italy on review for downgrade. Exports from the euro area dropped in October, led by declines in Germany and Spain.

Oil for January delivery fell 34 cents, or 0.4 percent, to $93.53 a barrel on the New York Mercantile Exchange, the lowest settlement since Nov. 2. The contract tumbled 5.9 percent since Dec. 9, the biggest weekly decline since Sept. 23. Prices are up 2.4 percent this year after climbing 15 percent in 2010.

Brent oil for February settlement slipped 25 cents to $103.35 a barrel on the London-based ICE Futures Europe exchange.

Crude may fall next week on speculation that Europe’s economy will shrink as the region’s debt crisis spreads. (Bloomberg)

UK banks' eurozone 'zombie' fears

British banks slashed their exposure to France, Italy and Spain in the three months to the end of September, highlighting fears over the spread of the eurozone sovereign debt crisis to some of the currency bloc's largest members. 

French exposures were cut by £19bn in the third quarter to £178bn, while holdings of Italian and Spanish assets were cut by £8bn and £5bn respectively, according to figures released yesterday by the Bank of England.

The decision of UK banks to reduce their exposures to the troubled countries came as they upped their holdings in Northern European and US assets. German exposures increased by £26bn, while Dutch were up £13.6bn. US exposures increased by £6.2bn.

Funding market conditions for eurozone banks continued to deteriorate this week despite the introduction by the European Central Bank of two long-term refinancing operations (LTRO) providing three-year funding.

Eurozone banks' shortage of collateral to borrow against has led the central bank to widen the pool of assets it will accept, however analysts warned the move could be a "fast-track to 'zombieville'".

" 'Excess' bank usage of the three-year LTRO runs the risk of creating more banks who are 'addicted' to ECB money – ie. the classic model of 'zombie' banks," said analysts at Barclays Capital. A 'zombie' bank is one which relies on central bank funding to survive.(The Telegraph)