Showing posts with label Gold Market. Show all posts
Showing posts with label Gold Market. Show all posts

Tuesday, May 26, 2015

Precious metals rally consolidates

 

Precious metals rally consolidates - gold and silver 2015 US

 

Gold and silver rallied strongly last Friday and into Monday’s overnight trading (UK time) before spending the rest of the week drifting lower from initial highs to consolidate above notional support at $1200 and $17 respectively. As of first thing this morning, UK time in US dollars gold is now up 2.2% and silver 10.2% on the year.

From observing price action, there appears to be continuing underlying physical demand, and on Wednesday the Russian Central Bank confirmed that it had taken the opportunity of sub-$1200 prices to add 300,000 ounces of gold to their official reserves last month. It is also reasonable to suggest that in times of increasing economic and systemic tensions in the Eurozone, some central banks will swap euros for gold to rebalance their reserves.

The Fed released April’s Open Market Committee minutes on Wednesday, which on balance was little more than another holding operation on interest rates, not bringing them forward to June or putting them off to next year. Apart from some minor volatility on their release there has been little effect on precious metal prices.

The next chart is of the gold price in the other three major currencies since 31 December 2014

Precious metals rally consolidates - gold price 31 Dec 2014

In terms of gold prices, the best performance has been in weakening euros with gold up 11.4% so far this year. The European central Bank announced it would look to accelerate its bond purchases in the short-term, leading currency markets to conclude that economic conditions in the Eurozone are weaker than expected, and with the deteriorating Greek situation euro weakness should come as no surprise.

Finally, it is worth drawing attention to developments on the Hong Kong Stock Exchange, where first Hanergy Thin Film fell 47% on Wednesday, wiping $18.6bn off its capitalisation before trading was suspended. This was followed yesterday by a similar collapse in share price for Goldin Financial (Hanergy’s broker) and Goldin Properties, together wiping out a further $16.6bn.

These events are typical ahead of a speculative blow-off in markets, and while Hong Kong’s Hang Seng Index appears to have risen broadly in line with major equity markets, other smaller markets in the region reflect excessive speculation. For example, on the Shenzen Market equities are trading at an average of 67 times earnings, having risen by 12% this week alone, and there are instances of new listings rising more than ten or twenty times in less than a month of trading.

Therefore, there is a growing risk that Hong Kong and Chinese equities could become a financially destabilising risk in the region and possibly further afield, adversely affecting other markets and potentially precious metal demand.

Source: GoldMoney

Friday, May 1, 2015

Minera IRL receives approval to build gold mine Ollachea

 

Minera IRL Limited is the TSX, AIM and BVL (TSX:IRL)(AIM:MIRL)(BVLAC:MIRL), Lima listed holding company of precious metals mining and exploration companies focused in Latin America. Minera IRL is led by an experienced senior management team with extensive industry experience, particularly in operating in South America. The Group operates the Corihuarmi Gold Mine and the emerging Ollachea Gold Project in Peru as well as the Don Nicolas Project in Argentina.

Peru approved the construction IRL gold gold mine Ollachea, giving the last authorization required for the start of the project in which it plans to invest about 180 million dollars, said Monday that focuses mining production in Latin America.


The mine, located in the southern region of Puno in Peru, the sixth largest producer of gold-, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.


The building permit from the Peruvian Government will let you start the project, "which will be implemented after obtaining the necessary financing for the second quarter of 2015," IRL said in a statement.


According to the latest data from the company, the Ollachea mine has probable reserves of 9.2 million tonnes grading 3.4 grams of gold per tonne of material.
The mine is scheduled to produce 930,000 ounces during the first nine years of life, an average operating cost of about $ 507 per ounce of gold produced, the company said.


The right of use of the site is for 30 years.


The IRL mining, which is listed on the Lima, London and Toronto, operates the small Corihuarmi mine in southern Peru and takes the gold plan folder Don Nicolas in Argentina.

 

pict

The mine, located in Puno, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.

http://www.minera-irl.com

 

Thursday, December 19, 2013

Gold Market Report - Thurs 19 Dec

 

Fed Tapering Whacks Gold, Spooks China, "Normalization" Challenged by US Earnings

WHOLESALE London gold sank against all currencies Thursday morning, falling 1.9% vs. the Dollar to hit 6-month lows after initially trading flat overnight despite the US Fed finally reducing its $85 billion per month in asset purchases.

Cutting next month's quantitative easing of US mortgage and longer-term government bond rates to $75bn, the Fed pointed to "growing underlying strength in the broader economy."

US stockmarket indices the S&P500 and the Dow surged to new all-time closing highs, while Treasury bonds fell and spot gold fell through this week's previous low at $1230.

Besides the taper, however, the Fed revised its policy on short-term interest rates, saying it will hold the federal funds rate at zero "well past the time" that the US jobless rate falls to 6.5%, its previous line in the sand.

Overnight in Asia, Japanese shares rose but Chinese stocks fell as the People's Bank of China broke its own rules and took to Weibo, the equivalent of Twitter, to announce a "short-term liquidity operation" after Shanghai's interbank lending rate jump above 10%.

The PBoC usually waits a month before reporting such moves, says the Financial Times.

"It's very clear they want to calm down market fears," the FT quotes ANZ analyst Zhou Hao, noting the previous spike in Chinese interest rates in June, when US Fed chairman Ben Bernanke spoke about possible QE tapering.

Shanghai gold today fell 0.8% in Yuan but increased its premium over international prices from $6 to $11 per ounce.

Amongst Western investors, "More sensible minds realise," says a note from David Govett at brokers Marex, "that on the whole [the Fed news] is not a good move for the precious complex.

"With further tapering probably to come over the course of next year, the outlook remains muted. However, I don't subscribe to the theory that it's all over for the bullion market [and] would be a buyer of dips if we do manage to break below $1200."

Bids in London's wholesale market briefly dropped below that level Thursday morning, hitting a 6-month low of $1199.75 per ounce.

Priced in Sterling and Euros, wholesale gold bullion fell to its lowest since spring 2010, down 29% and 31% respectively from the start of 2013.

Silver tracked gold in Dollars, briefly falling below $19.30 per ounce – a "key level" according to technical analysts at one bullion bank.

Fed tapering "highlights the overall positive sentiment towards the macro economy," reckons UBS analyst Joni Teves.

"Equities are in fierce competition with gold for investor dollars, and this year's trend of rotation away from gold into growth assets is expected to continue into 2014."

"This is another sign of increasing normalisation for the world economy," agrees Matthew Turner at Macquarie Bank. "Gold's insurance function is less desirable in that environment."

"But if the economy is accelerating as people think," counters Albert Edwards in his latest Global Strategy Weekly for clients of French investment and London bullion bank Societe Generale, "how come Thomson Reuters has just reported the fastest pace of US earnings downgrades on record?

"If we are set for a profits-driven economic slowdown, then the low rate of core inflation will start to become a key concern. Deflationary forces are in fact stronger than even the latest [official data] suggests."

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Monday, March 18, 2013

Gold Market Report 18 March

Gold Jumps Over $1600 as Cyprus Bail-Out Hits Bank Savers, Global Equities Fall

 

WHOLESALE GOLD leapt 1% against the Dollar and 2.3% against the Euro at the start of Asian trade Monday, as global shares sank and major-government bonds rose following the Cyprus bail-out deal announced by European politicians at the weekend.

"[German negotiators] were hand in hand with Finns," says an unnamed official quoted by the Financial Times, "who were much more dogmatic" in forcing a levy worth €7 billion on ordinary bank depositors as part of the €17bn deal.

"Scenes of
Cypriots lining up at cash machines
raised the specter of capital flight elsewhere," says Bloomberg, while Reuters claims that today's Bank Holiday may be followed by a forced shutdown on Tuesday to allow parliament to discuss and vote on the depositor levy, priced at 9.9% of savings accounts over €100,000 and 6.7% below.

"It's as if the Europeans are holding up a neon sign," writes economist Paul Krugman in his New York Times blog, "saying
'Time to stage a run on your banks!'
..."

"[This is] the first example of deposit hair-cuts during the entire Euro crisis," says forex strategist Jens Nordvig at Nomura.

The Cyprus deal "has potential to make depositors in Portugal, Spain and Italy nervous, despite likely assurances from policymakers," he writes.

Weaker Eurozone government bonds fell hard Monday morning, driving Greek interest rates half-a-percentage point higher, while base metals dropped alongside crude oil.

First hitting a 13-session high above $1608 per ounce, Dollar prices to buy gold then slipped back as European stock markets followed Asia in dropping over 1%.

The gold price in Euros jumped 2.3% at the start of Asian trade, hitting 5-week highs above €1240 per ounce as the single currency hit new 3-month lows vs. the Dollar.

Gold priced in Sterling held flat, however, as the British Pound surged nearly 2 cents to $1.51 on the foreign exchange market.

"One of the reasons gold has been coming off," says UBS analyst Tom Price, "is that there has been a view that the risk in Europe was limited and most of their financial market issues were resolved.

"This uncertainty could provide a brand new support for gold for days or even weeks."

Further ahead, "Global liquidity is rising," says London market-maker HSBC, trimming its 2013 average gold forecast from $1730 per ounce to $1700 but noting that "the Bank of Japan has joined the QE party and the Fed shows no let-up.

"Inflation tolerance and currency wars are supportive [of gold]. We expect stronger jewelry and coin demand, lower scrap supply [and] an end to ETF liquidation."

Investors in gold-backed trust funds led by the $63-billion SPDR Gold Shares cut their holdings last week for the 5th week running, reducing overall exchange-traded gold fund holdings to a new 6-month low of around 2,500 tonnes.

On the futures market, however, speculative traders grew their exposure to rising prices as a group in the week-ending last Tuesday. Latest data from US regulator the CFTC says the net long position of bullish minus bearish bets rose 7.4% from early March's 54-month low, the fastest jump since September.

"To sustain gold prices at $2000 by 2016", says analysis from investment bank Merrill Lynch, investors would need to
buy gold in quantities equal only to 2008 – almost 50% below 2011's record 1,700 tonnes – thanks to "steady increases of spending on non-essential items like jewelry in more affluent emerging markets."

 

Adrian Ash

 

(c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.

Tuesday, March 12, 2013

Gold Market Report 12 March

Gold Breaches $1590 after Weidmann Says "Eurozone Crisis Not Over", Chinese Physical Demand "Supporting Gold Right Now"

AFTER trading sideways for several sessions, gold bullion jumped above $1590 an ounce for the first time this month Tuesday morning in London, in what analysts called a "technical" move after gold broke through a key level following remarks from Bundesbank president Jens Weidmann.

"We see support at the bottom of the sideways range at $1561 and resistance at the top at $1586," said yesterday's technical analysis note from Scotiabank.

Gold rose above that level however shortly after Weidmann told reporters that the Eurozone crisis "is not over" and said that the Eurozone has "declining inflation risks".

Weidmann was presenting the German central bank's 2012 results, which show it more than doubled the amount it holds in reserve for what Weidmann called "risk provisioning".

Silver meantime rose to $29.25 an ounce this morning, still below last week's high, as other commodities were broadly flat on the day and US Treasuries gave up earlier gains.

European stock markets were also flat, a day after US markets rallied and the Dow Jones set another new record, having beaten its 2007 nominal peak last week.

Gold in Sterling meantime hit a five-week high above £1070 an ounce as the Pound fell this morning, while gold in Euros rose to a two-week high above €1225 an ounce.

"We still doubt a sustained rebound [in gold] is warranted at this point while the market is set to remain depressed," says Andrey Kryuchenkov, analyst at VTB Capital.

"Strong physical demand in China is the main reason behind gold's resilience," one trader in Beijing told newswire Reuters this morning.

"But the overall sentiment in prices is still weak. If demand from China weakens and we continue to see good US [economic] data and a stronger Dollar, gold has the chance to test $1500 this year."

On February 18, the first trading after Lunar New Year, volumes on the Shanghai Gold Exchange for its most popular gold contract, The Au9999, set a new record of just over 22 tonnes. Since then, daily Au9999 volumes have been more than double last year's average.

China was the world's second-biggest gold consuming nation in 2012, according to the latest data from the World Gold Council.

In world number one India meantime "there is no demand [for gold right now] due to financial year closing," according to Haresh Acharya at bullion wholesaler Parker Bullion in Ahmedabad.

Holdings of bullion backing gold exchange traded funds tracked by Bloomberg meantime continued to fall yesterday, the fifteenth straight day of net outflows.

In Washington, Congressman Paul Ryan is campaigning for the support of his fellow House of Representatives Republicans for his plan to balance the federal budget in a decade. Even if the plan is passed by House however it is not expected to win a vote in the Democrat-controlled Senate.

Senate Democrats meantime, who are expected to unveil an alternative budget plan this week, yesterday put forward plans to prevent a so-called government shutdown currently scheduled for 27 March, Reuters reports

The bill contains adjustments to spending aimed at ensuring government agencies are funded to the end of September, but does not seek to make up for the $85 billion in government spending cuts known as the sequester that came into effect March 1 and was originally agreed as part of the 2011 debt ceiling deal.

Across the Atlantic, UK manufacturing production fell 3% in the year to January, more than analysts were expecting, according to official data published Tuesday.

"Unless we have a stellar performance from the services sector, we're almost certainly in a triple dip [recession]," says London-based Scotiabank economist Alan Clarke.

Sterling fell to a fresh low against the Dollar this morning, touching $1.4831, its lowest level since July 2010.

The Bank of England's Funding for Lending scheme, which seeks to lend to banks at low rates so that they can provide credit to small and medium enterprises, should be put "on steroids" according to Britain's deputy prime minister Nick Clegg.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Wednesday, February 27, 2013

Gold Market Report 27 February

Fundamentals "Still Supporting Gold" as Bernanke Testimony "Shows QE Has Long Way to Go"

U.S. DOLLAR gold bullion prices fell slightly in Wednesday morning's London trading, but held above the $1600 per ounce level it rallied above yesterday after Federal Reserve chairman Ben Bernanke  told Congress that that Fed's ongoing quantitative easing policy "is providing important support to the recovery" and that the benefits "are clear".

Stock markets also posted gains this morning, making up some ground lost yesterday, while commodities were broadly flat and longer-dated US Treasuries gained.

Like gold, silver eased lower this morning but held above $29 an ounce by lunchtime in London.

In his testimony to the Senate Committee on Banking, Housing and Urban Affairs, Bernanke added "inflation expectations appear well anchored" and that the Fed does not expect to see "the development of significant inflation pressures".

Bernanke also reiterated the importance of keeping the federal funds rate close to zero.

"Keeping long-term interest rates low has helped spark a recovery in the housing market and has led to increased sales and production of automobiles and other durable goods," he said.

On the New York Comex the number of gold put options, which rise in value as gold falls below a given strike price, rose to a record following the publication of the latest Fed policy meeting minutes last week, according to news agency Bloomberg.

Following Bernanke's testimony yesterday however "the market is a little less concerned about a premature exit of quantitative easing, which would be bad for gold," says Nick Trevethan, senior commodity strategist at ANZ.

"Don't forget that the Fed's focus is on jobs and inflation. The job market has stabilized, but we are not seeing efficient job growth to make the exit of QE look imminent. There is still a long way to go."

Britain's economy meantime grew by 0.3% in 2012, according to the second estimate of fourth quarter gross domestic product published by the Office for National Statistics Wednesday, which revised last year's growth estimate up from zero. The Q4 contraction of 0.3% reported in the first estimate however remains unchanged, while government spending rose 0.6% over the quarter and 2.6% over the year as a whole.

"Government spending can't be sustained at that level," says Deutsche Bank economist George Buckley, "so an important part of economic growth is actually going to be taken away and the risk is that exports remain negative and that consumption weakens because of higher inflation."

The Bank of England's Monetary Policy Committee has discussed the possibility of setting negative interest rates, MPC member and BoE deputy governor Paul Tucker told the Treasury Committee yesterday.

Holdings of bullion held to back gold exchange traded funds meantime are on course for their biggest calendar month drop since April 2008, according to data tracked by Bloomberg.

"The [gold] market has lost increasing support this year in line with other perceived 'safe havens' such as the Japanese Yen, Swiss Franc and US Treasuries," says a note from Deutsche Bank this morning.

"We expect gold returns will eventually recover although this will most likely require a moderation in growth expectations and with it a correction in global equity and interest rate markets."

"The fundamental background for gold remains reasonably supportive," adds a note from Credit Suisse.

"It is rather that potential gold investors consider other classes more attractive...investors have the tendency to buy less of the precious metal in an environment where growth is stabilizing."

Gold bullion imports worth $2.7 billion contributed to Thailand's record trade deficit last month, the country's Commerce Ministry revealed Wednesday. Over the whole of 2012 demand for gold from Thailand was worth $4.3 billion, according to latest World Gold Council figures.

The volume of gold imported by Thailand rose 133% year-on-year, Ministry figures show, although its report did not include figures for gold exports.

Last week India, the world's biggest source of private gold demand, banned imports of gold jewelry from Thailand unless the authorities can be satisfied that the work in making the jewelry had added at least 20% to its value over and above that of the bullion content.

India last month raised its import duty on gold to 6%, although a trade agreement with Thailand meant that gold imported from there was only subject to a duty of 1%.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Tuesday, February 19, 2013

Gold Market Report - 18 February

Gold Fails to Hold Asian Gains, Next Large-Scale Devaluation "Could Be the Pound"

U.S. DOLLAR gold bullion prices failed to hold onto gains made in Monday's Asian session, falling to $1611 an ounce by lunchtime in London, just a few Dollars above Friday's six-month low, as the US Dollar extended recent gains.

Gold dropped 3.4% over the course of last week, including a sharp drop during Friday's US trading.

"The latest price slide was accompanied by significant outflows from gold ETFs," says today's commodities note from Commerzbank.

"Investors on the futures market are [also] largely to blame [for the price drop]."

The speculative net long position of gold futures and options traders on the Comex fell to its lowest reported level since August in the week ended last Tuesday, weekly data from the Commodity Futures Trading Commission show. The spec net long is calculated as the difference between 'bullish' long and 'bearish' short contracts held by Comex traders categorized as 'noncommercial'.

"Clearly, the market, which has been plagued by concerns over central banks' commitments to continued monetary accommodation, was concerned about the downside that would be opened up in the absence of Asian players that were celebrating Lunar New Year last week," says Marc Ground, commodities strategist at Standard Bank.

Trading volumes set a new record on the Shanghai Gold Exchange Monday, according to newswire Reuters, with more than 22 tonnes of the Au9999 contract (for bars of 99.99% purity) traded, as China's markets re-opened following last week's Lunar New Year holiday.

Silver meantime rallied back above $30 an ounce during Monday's Asian session, trading either side of that level during the morning in London.

European stock markets were little changed on the day by lunchtime, with volumes reported lower with US markets closed today for Presidents' Day.

Commodities were also broadly flat, with the exception of copper which was down more than 1.2% on the day by lunchtime in London.

On the currency markets, the US Dollar Index, which measures that currency's strength against a basket of other currencies, touched its highest level so far this year this morning.

Following a two-day meeting in Moscow, G20 finance ministers issued a joint communiqué over the weekend saying they will "refrain from competitive devaluation" of their currencies.

"We will not target our exchange rates for competitive purposes," the statement added.

"[The communiqué will] limit Japan's ability to provide verbal guidance on the Yen moving forward," reckons Adarsh Sinha, foreign exchange strategist at Bank of America Merrill Lynch.

"This likely takes away a key tool used by Japanese officials to weaken the yen at an unprecedented pace and shifts the burden of evidence to policy implementation."

The Yen however fell further against the Dollar this morning, extending Friday's drop and erasing most of the gains made last week ahead of the G20 meeting. 

Following the onset of the financial crisis in 2007, the Yen rose by more than a third against the Dollar by mid-2011, though it has since weakened by more than 20%.

Elsewhere on the currency markets, Sterling fell to a seven-month low against the Dollar this morning, also edging lower against the Euro.

More money managers are shorting Sterling than buying it for the first time in five months, the Financial Times reports, citing the latest CFTC data.

"The Pound seems clearly at risk of following the Yen and suffering the next large-scale devaluation for a major currency," reckons Mansoor Mohi-Uddin, head of global currency strategy at UBS.

"It is possible that the full benefits of [Sterling's] 2007/8 depreciation are yet to be realized," said Bank of England Monetary Policy Committee member Martin Weale in a speech on Saturday, adding that "growth of exports and a shrinkage of imports would together be a helpful source of demand for UK output".

The Royal Mint plans to make its first gold coins in India since 1918, in partnership with refiner MMTC-PAMP, with a view to marketing the coins in the world's largest gold buying market, the Mint announced Monday.

The announcement comes as British prime minister David Cameron starts a three-day visit to India, where he is due to meet business representatives.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Thursday, February 7, 2013

Gold Market Report 7 February

Gold & Silver "Trapped" in Tight Range, Volatility Near Half-Decade Lows, as PGMs Grab Attention

 

The GOLD PRICE eased $5 per ounce from a 2-day high in London trade Thursday morning, holding above $1676 as Asian stock markets closed lower but Europe held flat.

The Euro currency held onto a half-cent rise as the European Central Bank kept its key lending rate at a record low of 0.75% for the 15th month in a row.

Crude oil rose with other commodities, but silver bullion remained unchanged for the week so far at $31.80 per ounce.

Daily swings in the silver price haven't been as small as this week since spring 2007. Volatility in the US Dollar gold price has only been lower than yesterday on 15 days since mid-2005.

"The story in the precious metals market," says Commerzbank's commodities team, "continues to be the explosion in the price of platinum" – now 13% higher since the start of the year.

Palladium, which is also used primarily in the auto industry, is similarly "in a very bullish trend," they add, while "Gold and silver remain range-bound."

Technical analyst Russell Browne at bullion bank Scotia Mocatta calls the
gold price
"trapped" for the last month.

While the market may be "building a base" from which to rise higher, "We do not expect any speculative buying until the market can break 1695," he adds, "a level which has held since mid-December."

Commodity analysts at the
World Bank forecast
a 4% drop in the gold price by end-December, with a further 3% fall to $1550 over 2014.

"Most risks are on the downside," says the World Bank's latest Commodity Market Outlook, "as the pace of global recovery improves, including further easing of financial tensions in Europe."

The recent "high gold prices have [also] attracted considerable investment in the gold mining industry," the report adds, "not only to replace aging existing mines but also to develop new mines."

China's gold mining output rose in 2012 for the 6th year, Shanghai Securities News said today, confirming its world #1 position with a record 403 tonnes.

Together with
China's gold imports through Hong Kong
of 524 tonnes (net of exports), that figure takes China's domestic demand for last year to at least 926 tonnes.

Imports to India – the world's #1 consumer nation until 2012, but with no domestic mine output – fell one-third by value over the first 9 months of last year, perhaps taking full-year shipments below 650 tonnes.

"[The gold] market is slow these days," Reuters quotes a Mumbai bank dealer, "as overall sentiments are not so good because of [central bank] comments."

After gold import duties were hiked to 6% last month, the Reserve Bank of India on Wednesday proposed strict controls on import quantities, perhaps forcing wholesalers to re-export certain quantities and use recycled domestic metal instead, to try and cut the country's large trade deficit.

"If they come up with quota system," says the dealer quoted by Reuters, "then market will become very ugly."

The Rupee slipped back Thursday against the Dollar, but remained 5% above last month's multi-decade lows.

Sterling meantime whipped violently as first Mark Carney – who takes over as governor at the Bank of England this summer – spoke before lawmakers in London, and then the central bank held UK interest rates at 0.5% for the 48th month in succession.

"[Economic] risks are weighted to the downside..[but] inflation is likely to rise and may remain above the 2% target for the next two years," the Bank said as it also maintained its quantitative easing at £375 billion ($590bn).

It will now start recycling the cash from maturing government bonds, it said, into new purchases of public debt.

"Returns to QE have declined, particularly in the US, as the scale of programme has increased," said Mark Carney, currently head at the Bank of Canada, to the Treasury Select Committee this morning.

But "unquestionably" the UK economy's "considerable slack...will be a situation that merits considerable monetary policy stimulus," when he takes over from Sir Mervyn King in June.

The gold price for UK savers today touched a 10-week high above £1073 per ounce.

It has risen more than 5-fold since King moved from deputy to governor in June 2003. Consumer price inflation has averaged 2.7% per year, against the Bank's official target of 2.0%.

 

Adrian Ash

 

(c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.

 

 

Tuesday, February 5, 2013

Gold Market Report 5 February

Gold "Could Test Resistance After Consolidation", Chinese Gold Imports from Hong Kong Set New Record

WHOLESALE MARKET gold bullion prices rose above $1680 an ounce Tuesday morning in London, trading close to last week's high, as stocks, commodities and the Euro also gained and US Treasuries fell, following better-than-expected services sector data from Europe.

Silver meantime touched $32 an ounce for the first time this week.

"We will remain short term bearish [on gold] while resistance [around $1696 per ounce] caps," says Axel Rudolph, senior technical analyst at Commerzbank.

"Should this resistance zone unexpectedly be overcome, however, our medium term bullish forecast will be reinstated with the 1750 region then being targeted."

"The January 4 low at $1625 is pivotal," add technical analysts at Scotia Mocatta,"and there should be good support there...the consolidation since that date may indicate gold is forming a base."

Sentiment towards gold among western households grew less bullish last month, according to data published by BullionVault Tuesday.

The Gold Investor Index, which tracks buying and selling on the world's largest physical gold market for private investors online, fell to 54.9 in January, down from a 12-month high of 58.3 a month earlier and its lowest reading since September. A figure above 50 indicates more net buyers than net sellers over the month.

Weekly data published by the Commodity Futures Trading Commission last Friday meantime show the speculative net long position of gold futures traders, a closely-watched measure of futures market sentiment, fell to levels not reported since August during the week ended last Tuesday, indicating reduced bullishness among traders.

Over in India, traditionally the world's biggest source of private gold demand, the government's "anti-gold" stance  means Indian gold demand "is going to face a difficult year", according to Philip Klapwijk, global head of metal analytics at precious metals consultancy Thomson Reuters GFMS.

"Comparing demand last year with 2011, we see this rather strange phenomenon that India was the standout for the country where demand collapsed the most," Klapwijk told a conference in cape Town Monday.

"In other parts of the world, they shrugged off the 6% increase in gold prices rather well and in other parts we saw growth in jewelry demand."

Gold bullion imports to China through Hong Kong nearly doubled in 2012, hitting a record 834.5 tonnes, the island's Census & Statistics Department said today. 

Now the world's largest gold consumer as well as the number one mining producing nation, however, China also trebled its exports of gold through Hong Kong, the data show.

Gold bullion imports net of exports rose 56.0% to 523.6 tonnes on BullionVault's maths.

China's central bank meantime injected a record 450 billion Yuan ($72 billion) into the country's money markets Tuesday ahead of next week's Lunar New Year holiday.

Bank of Japan governor Masaaki Shirakawa announced Tuesday that he will step down three weeks earlier than scheduled, and will now leave his post on March 19.

At its most recent policy meeting, the BOJ doubled its inflation target from 1% to 2% and announced it will launch open ended quantitative easing once the current round of QE ends next year. 

The BOJ's move was largely expected, having been called for by prime minister Shinzo Abe following his election victory in December, and was described as "threatening an end to central bank autonomy" by the head of Germany's Bundesbank Jens Weidmann.

"[Shirakawa's] resignation will likely push forward the timing of bold monetary easing action [by the BOJ," reckons Akito Fukunaga, chief rates strategist at RBS Securities Japan in Tokyo.

"Shirakawa has probably judged that it's better for the BOJ to start with a new top three who have similar views."

In Europe, the services sectors of Germany, Spain and the Eurozone as a whole all saw better-than-expected improvements in conditions last month, according to monthly purchasing managers' index data published this morning, although the PMIs for Spain and the Eurozone remained below 50, indicating sector contraction.

Italy's services PMI by contrast was lower than the consensus forecast among analysts, and down on the month earlier, indicating a sharper rate of contraction during the month.

In the UK, January's services PMI was 51.5, up from 48.9 a month earlier.

"A huge sigh of relief accompanies these numbers, as a return to growth of the service sector in January greatly reduces the likelihood of the UK falling back into a 'triple-dip' recession," says Chris Williamson, chief economist at Markit, which produces the PMI.

Both the Euro and Sterling rallied against the Dollar this morning, although Sterling reversed most of the move by lunchtime. Both currencies remain below where they started the month.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Monday, February 4, 2013

Gold Market Report 4 February

Futures Market Retreat "Good for Gold in the Long Term", Spain Hit by Political Crisis

WHOLESALE MARKET gold prices hovered just below $1665 per ounce Monday morning in London, having failed to hold onto gains in earlier Asian trading, as stocks and commodities also ticked lower along with the Euro, which retreated from recent highs following news of a political scandal in Spain.

Silver erased most of Friday's gains this morning, dropping below $31.60 an ounce.

The gold price in Euros meantime regained some ground this morning as the Euro fell against the Dollar. Last Friday, gold in Euros dropped to its lowest level since May last year as Euro-Dollar touched a 14-month high.

In New York, the so-called speculative net long position of Comex gold futures and options traders fell to its lowest reported level since last August during the week ended Tuesday 29 January, weekly data published Friday by the Commodity Futures Trading Commission show.

The spec net long is calculated at the difference between 'bullish' long and 'bearish' short contracts held by traders such as hedge funds which are classified as 'noncommerical', and is regarded as an indicator of short-term sentiment in the derivatives markets.

"The 'weak hands' are further retreating from the gold market, which is a good thing in terms of the long-term price prospects," says today's commodities note from Commerzbank.

Spanish prime minister Mariano Rajoy, who travels to Berlin today for talks with German chancellor Angela Merkel, denied allegations in the Spanish press over the weekend that he received illegal payments from a slush fund run by his Popular party (PP).

Support for the PP has fallen six percentage points to 24% since the allegations were made, according to a poll published by Spanish newspaper El Pais, while 77% of those surveyed said they do not approve of Rajoy.

The number of unemployed in Spain meantime rose to 4.98 million last month, official figures published Monday show. Last month brought news that the unemployment rate rose to record levels above 26% towards the end of 2012.

In Italy, prime minister Mario Monti today criticized his predecessor Silvio Berlusconi's proposal to reimburse taxes paid on primary residences that were levied by Monti.

"Berlusconi wants to buy the votes of Italians with the money that Italians had to turn over to cover up the shortfall left in the public accounts by Berlusconi," Monti said.

A poll published last week showed Berlusconi had cut the lead of front runner Luigi Bersani to five percentage points ahead of elections in three weeks. 

Bersani's Democratic Party (PD) has faced criticism for allegedly receiving funding from Siena-based Monte dei Paschi (MPS), the world's oldest bank dating back to 1472, which  is currently being investigated for covering up losses on derivatives trades and overpaying for its 2007 acquisition of Banca AntonVeneta.

MPS lost an estimated €2 billion-plus in 2012, following a €4.6 billion loss in 2011.

In Germany meantime, politicians have expressed skepticism over whether to accede to Cyprus's request for a bailout from the European Union and International Monetary Fund.

"Without the introduction of effective controls on money-laundering and urgently needed structural reforms, we need not even discuss financial aid," Rainer Bruederle, a member of the Free Democratic party which shares power with Merkel's party, said over the weekend.

"Cyprus is based on a business model that damages us all," added Johannes Kahrs of the opposition Social Democrats.

"Yet it is now supposed to be saved by the EU. The SPD will not support that."

"There's general unease...about the fact that Cyprus takes in a good deal of cash from Russians," explains a note from Standard Bank.

Over in India meantime, traditionally the world's biggest gold buying nation, Rupee gold prices fell to five-month lows Monday as the Rupee touched its highest level against the Dollar since October.

At the start of the year Indian gold dealers imported increased quantities of gold ahead of a rumored import duty hike, with the authorities duly raising the duty from 4% to 6% last month.

"Not many deals are happening [at the moment]," one dealer at a state-run bullion importing bank told newswire Reuters this morning.

"[The] market has to clear the old stocks, which could finish this week."

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Sunday, February 3, 2013

Gold Market Report 1 February

"End of an Era" for Gold as S&P 500 Records Best January Since 1997

THE U.S. DOLLAR gold price recovered some of its losses from the previous day Friday, edging higher to $1666 an ounce by the end of the morning in London, while most stock markets also edged higher ahead of US nonfarm payrolls data due out 08.30 Washington, DC time.

A day earlier, gold dropped 1% during Thursday's US session, in what one analyst describes as "a remarkable display of schizophrenic volatility".

A few hours later there was "little buying on the physical side" in Friday's Asian session according to one Hong Kong dealer quoted by newswire Reuters.

"There's some buying from mainland China...but I think gold is a bit tired after it failed to break $1700 an ounce."

European stock markets edged higher this morning, with exceptions in Italy and Spain. Spain's IBEX 35 index extended recent losses and was down 1.4% on the day by lunchtime today, the first day of trading after a ban on short selling dating from last July came to an end yesterday. Spanish stocks have now erased their gains from January.

The S&P 500 by contrast has seen its best start to a year since 1997, rising 5.2% last month.

"Earnings are strong, the economies around the world are bottoming and valuations are attractive," reckons Paul Zemsky, head of asset allocation at ING Investment Management in New York.

BNP Paribas today became the fifth big bank to follow Goldman Sachs and cut its 2013 gold price forecast by up to $100 per ounce. 

The French bank's analysts now believe gold will average $1790 per ounce this year.

Credit Suisse meantime published a note today entitled 'Gold: The Beginning of the End of an Era', arguing that the 2011 gold price peak could prove to have been the high "in this cycle" as the financial crisis grows less acute.

Like gold, silver also edged higher this morning, ticking above $31.40 an ounce, while other commodities were broadly flat.

China's manufacturing sector meantime continued to expand in January, though at a slower rate than the month before, according to official purchasing managers' index data published by Beijing Friday.

China's official manufacturing PMI fell to 50.4 last month, down from 50.6 in December, with a figure above 50 indicating sector expansion.

HSBC's manufacturing PMI by contrast rose to 52.3, up from 51.9 a month earlier, implying an accelerated growth rate. The HSBC PMI is more heavily weighted towards small and medium enterprises than the official PMI, which places greater emphasis on the views of purchasing managers at larger state-owned enterprises.

"Overall, I will put more weight on today's official PMI, largely because the current recovery is still rather narrowly based," says Li-Gang Liu, chief China economist at ANZ.

"We believe the state sector tends to benefit from this round recovery much more than the SME sector, a sector that tends to dominate the HSBC sample. The HSBC PMI also has a pattern of pro-cyclicality. When the markets are optimistic, the HSBC often becomes more so, and vice versa."

Over in Europe, Germany's manufacturing PMI rose from 46.0 in December to 49.8 last month, while for the Eurozone as a whole the manufacturing PMI rose from 46.1 to 47.9.

"Providing there are no further setbacks to the region's debt crisis, these data add to the expectation that the Eurozone is on course to return to growth by mid-2013," says Chris Williamson, chief economist at Markit, which produces the European PMI data.

In the UK meantime, manufacturing PMI fell last month to 50.8, down from 51.2 a month earlier. Similar PMI data for the US are released later today.

The US Senate Thursday approved legislation to extend the federal debt ceiling until May 19. The legislation now needs to be signed into law by President Obama.

The US Mint meantime reported a record monthly volume of silver American Eagle bullion coin sales for January. Just under 7.5 million ounces of the silver coins – which are produced specifically for investment purposes – were sold last month. Sales of gold American Eagle coins were their highest since July 2010 at 150,000 ounces.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Thursday, January 31, 2013

Gold Market Report 31 January

Investors "In Great Danger" If They Don't Own Gold, Warns Faber, as GDP Drop Sees US Fed Press On with QE

 

The PRICE of GOLD held onto most of yesterday's $15 jump at $1676 per ounce Thursday morning in London, ticking back as Asian and European stock markets fell after Wednesday's surprise drop in US economic output figures.

Silver also eased back, but held at 1-week highs above $32 per ounce after rising yesterday in gold's "slipstream" as one bullion-bank analyst put it.

"This Friday's [non-farm US payroll] report remains crucial," says a note from Swiss bank UBS – currently
encouraging its institutional clients to buy gold
outright rather than as a credit-risk deposit.

"Some adjustments to [gold] positioning are likely to emerge" after Wednesday's 'no change' decision from the US Federal Reserve on zero interest rates and quantitative easing.

"But overall, the gold market should resume subdued trading," says UBS, "as is typical ahead of a key event" such as the monthly jobs report.

Russia's foreign ministry meantime condemned a reported Israeli air-strike on a military research unit inside Syria, saying Thursday that – if confirmed – this "unprovoked attack [would] blatantly violate the UN Charter."

Shares in Italy's struggling Banca Monte dei Paschi di Siena – founded in 1472 – steadied as the Italian central bank weighed MPS's second bail-out request in four years after it hid losses of €500 million on a 2008 derivatives deal.

German banking giant Deutsche Bank lost €2.2bn ($3.0bn) for the last 3 months of 2012, it said today.

"A year ago, the mood in Europe was horrible and nobody could see how on earth stocks could go up," says Gloom, Boom & Doom author and money-manager Marc Faber, who
urged CNBC anchor Maria Bartiromo
to buy gold earlier this week.

"Now since May 2012, less than a year ago, Portugal, Spain, Italy, France, are up between 30 and 40% and Greece has doubled...!"

Factory-gate prices across France and Italy fell in December from November, new data showed today.

House prices in the year to October fell 2.5% across the 17-nation Eurozone, with Spain's home-price drop accelerating to 15.2%.

"For the first time in four years," Faber continued Wednesday, pointing to the US stock market, "since the lows in March 2009, I love this market. Because the higher it goes the more likely we will have a nice crash, a big time crash.

"You are in great danger if you don't own any gold," Faber had earlier told Bartiromo.

Near-term, reckons Deutsche Bank analyst Xiao Fu – and despite Wednesday's $15 rise on poor US growth data and the Federal Reserve's no-change decision on zero rates and QE – "Gold lacks a convincing catalyst near term to take it convincingly higher and instead remains susceptible to opportunistic selling."

But "Any thought given to reining in some of the Fed's buying power will now be shelved," counters Ed Meir in his daily note for INTL FCStone.

"[Wednesday's] GDP number clearly shows that the US economy is still far from capable to muster its own momentum without key fiscal and monetary stimulus.

"In the least, this should provide an element of support to the precious metals group, at least over the short term."

After creating and spending first $1.4 trillion on mortgage and Treasury bonds in 2008, and then a further $600 of T-bonds starting in 2010, the US Fed will likely acquire a further $1.1 trillion of US government debt with its current program of quantitative easing, according to a Bloomberg survey of analysts.

"Given the sluggish [US] economy," says precious metals strategist Eugen Weinberg at Commerzbank, "it would be premature to discuss [the Fed] abandoning the quantitative easing programme.

"Despite the noticeably higher risk appetite displayed by market players of late, gold demand is thus unlikely to ebb away completely. On the contrary, high sales of US gold coins in January, and renewed inflows into the gold
ETFs
recently, point to relatively robust demand for gold."

Over in India – most likely the world's #2 gold consumer market in 2012 behind China – the economic affairs secretary contradicted the finance minister yesterday over plans to
raise gold import duties again
, in a bid to curb household appetite to buy gold, widely blamed for India's yawning trade deficit.

Two days after Palaniappan Chidambaram told the Financial Times that New Delhi is considering "some other steps to moderate the import of gold" further, Arvind Mayaram told Reuters that "I don't think there is any plan as of now."

 

Adrian Ash

 

(c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.

 

 

Wednesday, January 30, 2013

Gold Market Report 30 January

Gold & Silver Jump on Weak US Data, Big Swiss Banks Raise Gold Account Fees

 

GOLD and silver jumped to 4-session highs above $1674 and $31.65 per ounce respectively Wednesday lunchtime in London, gaining as new data showed the US economy unexpectedly shrinking in late 2012.


US stock-market indices held flat near 5-year highs, while the EuroStoxx 50 was unchanged near 18-month highs despite news that Spain's GDP shrank by 0.7% in the last 3 months of 2012.

Greek newspaper Kathimerini meantime said 30 activists from the communist PAME union briefly stormed the Athens' office of employment minister Yiannis Vroutsis.

The Euro currency this morning rose to its best level in 14 months at $1.3560.

The
gold price in Euros today hits its lowest level since May 2012 at €1228 per ounce.

"Bernanke will not be giving a press conference" after today's US Federal Reserve announcement, notes Wednesday's commodity report from Standard Bank. "So there will be plenty of reading between-the-lines of the official statement.

"[But] we feel it is important to note that the Fed's balance sheet is only one piece in a puzzle of growing liquidity and negative real interest rates.

"Strategically we remain bullish on gold over the long term. The cost of holding gold relative to cash remains negligible."

Gold account fees at Swiss banking giants Credit Suisse and UBS are being raised however in a bid to shrink their balance-sheets, says a report in today's Financial Times.

"Like their global peers, UBS and Credit Suisse are under regulatory pressure to reduce capital-intensive activities ahead of the introduction of Basel III global banking rules," says the FT.

So the two banks are hiking costs for unallocated accounts – where the customer pays full price to buy gold, but is then owed the metal, bearing credit risk if the bank fails rather than becoming an outright owner as with
allocated gold.

Unallocated gold enables the bank to lease out the metal, earning an income from the client's gold. But analysis of London Bullion Market Association
data shows that the net return on 12-month gold leasing has fallen from averaging 1.63% in the decade to Jan. 2003 to averaging less than 0.40% in the 10 years since.

Moreover, "When [gold] is on balance sheet it does create costs" in the form of capital requirements by regulators, an anonymous source tells the FT.

Gold demand in Asia meantime eased off Wednesday, according to Reuters, as Chinese wholesalers prepared for next month's Lunar New Year celebrations, and Indian wholesalers cut prices in a bid to clear stockpiles.

"Those who have built up a large inventory before [this month's new import-duty] tax hike are selling at a discount right now," the newswire quotes a bank trader in Mumbai, citing discounts to local prices of 0.5% – some $6 per ounce.

The Chinese New Year falls in 2013 on 10th February.

 

Adrian Ash

 

(c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.

Tuesday, January 29, 2013

Gold Market Report 29 January

Gold Outlook "Bearish in Short Term" as Fed Meeting Looms, But "Growing Global Liquidity Makes Long Term Outlook Bullish"

WHOLESALE Gold Bullion prices climbed back above $1660 an ounce Tuesday morning, broadly in line with where they ended last week, as stocks and commodities fell slightly and the Dollar ticked higher against the Euro ahead of tomorrow's interest rate decision from the US Federal Reserve.

"We are seeing a technical rebound following a few days of price decline," one trader in Shanghai told newswire Reuters this morning.

"In the short run, gold is still going to drift without much conviction, though over the longer term it is still facing very heavy pressure on the upside."

"We have neutralized our medium term forecast and also now have a short term bearish outlook," says Commerzbank senior technical analyst Axel Rudolph, citing gold's failure to breach its 55-day moving average at $1696 an ounce.

"The $1625.77 level is still key for the medium term trend. Failure here could provoke a sell-off to below the $1600 level."

Like gold, silver regained some ground this morning after losses in recent days, climbing back above $31 an ounce.

Here in London, the FTSE 100 retreated from five-year highs this morning, as other European stock markets also dipped slightly.

In the US, the Federal Open Market Committee begins its two-day meeting today ahead of the Fed's latest policy decision tomorrow.

"This week's FOMC meeting and US non-farm payrolls [on Friday] will be key in setting gold's price trajectory," says a note from Barclays Capital.

"[Minutes from last month's] FOMC meeting [show] that some FOMC members are looking for an exit to further asset purchases before the end of 2013," says the quarterly preview from Standard Bank's commodities desk.

"If the Fed stops its quantitative easing program, it should temper some of the upside for gold and silver – at least in US Dollar terms – relative to an environment where the Fed still expands its balance sheet...but to us, the Fed's balance sheet is only one piece in a bigger puzzle of growing liquidity and negative real interest rates."

The Fed will continue with $85 billion a month of asset purchases – comprising $40 billion of mortgage-backed securities and $45 billion of government bonds – until the first quarter of 2014, by which time it will have bought $1.14 trillion worth, according to the median estimate in a survey of economists conducted by news agency Bloomberg.

"To get to the point where Bernanke would be comfortable letting up, you have to have a good solid string of economic reports [this year] that you're just not going to get," says Eric Green, global head of rates and FX research at TD Securities in New York.

"The Fed is resuming rapid expansion of the monetary base," says Don Coxe, former strategy advisor at BMO Financial Group, in his final issue of his monthly BMO strategy journal 'Basic Points'.

"Japan will soon be flooding the currency markets with Yen. The European Central Bank remains expansionary...it is almost impossible to conceive of a more bullish long-term backdrop for gold."

Coxe also sees demand from India and China, two countries that account for around half of world gold demand, continuing to support gold prices.

Indian exports of gems and jewelry are expected to rise by 15% this year to more than $44 billion, with silver exports seen jumping 30%, according to Pankaj Kumar Parekh, vice chairman of India's Gems and Jewellery Export Promotion Council.

"At such high prices, gold is going out of budget for many youngsters," says Parekh.

"A wrist bracelet of white gold is now replaced with sterling silver as it is cheaper."

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Gold Market Report 28 January

Safe Havens Assets "Under Pressure" as Gold, Silver Fall While Stock Markets Hit 5-Year Highs

THE U.S. DOLLAR gold price extended its losses from last week Monday, dipping to a near-three-week low below $1655 per ounce during London's morning trading, as stock markets ticked higher, with the FTSE 100 hitting its highest level since May 2008.

The S&P 500 meantime climbed above 1500 last week for the first time since December 2007.

Silver this morning dropped below $31 an ounce to hit a two-week low, while other commodities were broadly flat and US Treasuries gained.

Last week saw spot gold fall 1.5%, while silver was down 2.1%.

"It seems that a number of safe haven refuges like gold, the Japanese Yen, US Treasury bonds, and the Swiss Franc have all been under pressure lately," says Ed Meir, metals analyst at brokerage INTL FCStone.

"Investors [are becoming] more comfortable parking their capital in riskier asset classes like the Euro and equity markets."

The Swiss Franc is still "too strong", Switzerland's economy minister Johann Schneider-Ammann said Saturday, adding that he "hopes it will devalue further".

"The Franc is still very strong," Swiss finance minister Eveline Widmer-Schlumpf told reporters at the World Economic Forum in Davos the same day.

In September 2011, the Swiss National Bank announced a peg of SFr1.20 to the Euro in September 2011, following several years of Franc appreciation. The Swiss currency has weakened in recent weeks against the Euro, trading above SFr1.24 this morning, as the Euro has strengthened on the currency markets.

On Friday, SNB chairman Thomas Jordan told Davos he expects further weakening of the Franc. 

A campaign to force a referendum on Switzerland repatriating all its foreign-vaulted gold bullion and increasing its gold reserves is nearing its target of 100,000 signatures.

Britain's chancellor George Osborne would prefer to see the bank of England continue with its current inflation target policy framework rather than shift to targeting a nominal level of economic output, according to a report in the Financial Times Monday.

In a speech last month, Bank of Canada governor Mark Carney, who takes over at the Bank of England this summer, suggested a role for so-called nominal GDP targeting. When he spoke in Davos on Saturday however Carney "went out of his way not to mention nominal GDP", the FT reports, but instead praised "flexible inflation targeting".

Since the start of this month, Sterling has depreciated 4% against the Dollar and more than 5.5% against the Euro, which climbed to a 14-month high against the Pound this morning.

The gold price in Sterling meantime is up more than 2% from where it started January, while the Dollar gold price is flat on the month and gold in Euros is down 3%.

The so-called speculative net long position in Comex gold futures and options – calculated as the difference between 'bullish' long and 'bearish' short contracts held by noncommercial traders – ticked higher in the week ended last Tuesday, weekly data published Friday by the Commodity Futures Trading Commission show.

The world's biggest gold exchange traded fund meantime continued to see outflows of bullion held to back its shares on Friday. The volume of gold held by SPDR Gold Trust (GLD) fell by nearly two tonnes from a day earlier to 1329.9 tonnes, its lowest level since the start of October.

The world's largest silver ETF also continued to see outflows, with the volume of silver held by iShares Silver Trust (SLV) falling to 10,468.8 tonnes Friday – though this was still more than 300 tonnes above where it was 10 days previously following strong inflows.

"For the first time in eight weeks, ETFs' commitment to silver has wavered," says Standard Bank commodities strategist Marc Ground.

Kazakhstan and Russia both added to their gold reserves last month, International Monetary Fund figures show. Kazakhstan's reserves rose 1.7% to 115.3 tonnes, the figures show, while Russia grew by 2.1% to 957.8 tonnes.

Russia's central bank intends to continue buying gold, its first deputy chairman Alexei Ulyukayev said earlier this month, although he denied there is a target for gold to make up 10% of reserves.

Despite a flurry of new regulations to control "speculation" in Vietnam's gold market, unlicensed trading of bullion continues, according to local press reports. 

Some dealers and consumers have switched to trading rings and other jewelry pieces instead of gold bullion bars. This weekend, the State Bank said it will become the sole point for import and export of gold.

Ben Traynor

(c) BullionVault 2013

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 – and must be verified elsewhere – should you choose to act on it.

Friday, January 25, 2013

Gold Market Report 25 January

Gold Looking "Sloppy" Short term, But Pullback "Attractive" as Chinese Buyers Take World #1 Spot

 

The GOLD PRICE slipped back to last night's near-two week lows at $1665 per ounce Friday lunchtime in London, heading for a 1.1% drop on the week as world stock markets and other "risk assets" rose.

Silver also ticked lower to trade 2.7% beneath Wednesday's 5-week highs.

Germany's Ifo index of business sentiment meantime hit its best level since June.

The European Central Bank surprised analysts by saying 278 banks in the single-currency zone will repay €137 billion ($184bn) of their
3-year LTRO loans
next week, nearly two-thirds more than expected.

"It now seems that the stronger tone in global equity markets, coupled with a notable easing in European and US market tensions, is leading to short-term pressure on gold," reckons INTL FCStone analyst Ed Meir.

"We think it will continue for a little while longer, given that negative chart picture[s] are also contributing to the sloppier tone."

Also looking at gold price charts, this week's "failure to make a new high...is bearish," says bullion bank Scotia Mocatta, pointing to $1625 as the "next level of support."

Barclays' technical analysts think a "pullback" to $1640 is now likely, following Thursday's finish in US gold futures beneath $1675.

Despite stronger-than-forecast US economic data, however, "Accommodative [monetary] policy is still expected to remain in place for some time," counters London market-maker UBS, "a scenario that continues to be conducive for higher gold prices.

"[Gold's] recent pullback should be viewed as an opportunity to pick up metal at more attractive levels."

On the currency markets Friday, the British Pound fell to a 5-month low against the Dollar and a 13-month low against the Euro after new data showed the UK economy shrinking 0.3% at the end of 2012.

That capped the drop in Sterling
gold prices
to £5 for the week at £1056 per ounce.

The quantity of
gold bullion
held to back shares in the world's biggest gold ETF trust fund – State Street's GLD – shrank again on Thursday, down another 3 tonnes to 1331.7 and now 1.7% smaller from mid-December's record holding.

Silver backing the iShares Silver ETF – the SLV – extending this week's contraction to 237 tonnes or some 2.2% of the total.

That is "still well under half" of last week's addition however, notes Bloomberg News.

"We used to watch Comex [futures contracts] open interest," Bloomberg quotes Bernard Sin at Swiss refining group MKS in Geneva, "but now everybody looks at ETF holdings to give a clear signal of investor interest."

Over in Asia, meantime, China is "now clearly the largest global consumer of gold" – overtaking India at last – says the latest Commodities Weekly from Natixis.

Analysts at the French investment bank and bullion dealer point to the latest available import and mining-output data available from the world's top two gold buying nations.

"India's low figure is the combination of a weak Rupee, slower economic growth and higher import tariffs."

On the supply side, gold mining bosses are "more optimistic" about gold prices in 2013 than they were in 2012, says the new
Global Gold Price Report
from consultancy PwC.

"Eighty-three per cent of executives believe we will see a rise in the price of gold, with zero expecting to see a decline," says PwC.

"Executives of some of the largest gold companies expect to see the price of gold climb beyond $2000 in 2013."

 

Adrian Ash

 

 (c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.

Asian markets mixed, Tokyo surges on yen tumble

HONG KONG: Asian markets were mixed on Friday, with Tokyo's Nikkei surging on the back of a weaker yen, while Wall Street provided an uneven lead.

The yen resumed its downtrend after a brief rally as the country's vice finance minister indicated the new hawkish government would step in to stop the currency from returning to record highs against the dollar.

Tokyo surged 2.14 percent, Hong Kong added 0.11 percent and Sydney was 0.42 percent higher while Shanghai climbed 0.10 percent but Seoul lost 0.69 percent.

Takehiko Nakao said the government was closely watching the yen's movements in currency markets, adding that "appropriate action" would be taken if it got too strong.

His comments in an interview with the Wall Street Journal sent the yen tumbling Thursday in New York.

The US dollar jumped to 90.40 yen from 88.56 yen a day earlier, while the euro climbed 120.91 yen from 118.00 yen.

In early Japanese trade the dollar stood at 90.42 yen and the euro bought 120.87 yen. The single currency fetched $1.3371, from $1.3376 in New York.

"Nakao's comments serve as a stark reminder of the government's unrelenting drive to pursue a weaker currency in an attempt to resuscitate the economy," Chris Gore, currency analyst at Go Markets said in a note to clients, according to Dow Jones Newswires.

The comments also capped a rise in the yen that began on Tuesday as dealers were left disappointed by the Bank of Japan's plan, which had been widely expected, to set an inflation target to beat deflation, and pursue unlimited monetary easing.

Highlighting the work ahead, official data Friday showed the economy remained stuck in a deflationary rut, with core consumer prices slipping 0.1 percent in 2012, the fourth annual decline.

While traders took heart from another rise on the Dow, which ended 0.33 percent higher after figures were released showing weekly US jobless claims fell for a second straight week, Wall Street's other two major indexes fared less well.

The S&P 500 was flat and the tech-rich Nasdaq fell 0.74 percent, dragged by a 12 percent plunge in Apple after the iPhone maker's latest earnings report fell short of expectations.

Seoul, which fell on weak economic growth figures Thursday, took another hit on Friday after index giant Samsung Electronics posted below-forecast results for the October-December fourth quarter.

Oil prices fell, with New York's main contract, light sweet crude for delivery in March dropping eight cents to $95.87 a barrel and Brent North Sea crude for March delivery shedding 18 cents to $113.10.

Gold was at $1,667.10 at 0200 GMT compared with $1,677.37 late Thursday.

Source: AFP

Thursday, January 24, 2013

Gold Market Report 24 January

Traders "Bored" by Gold But Long-Term Case "Robust" as Russia Buys, Spanish Sell

 

PRECIOUS METALS prices fell in Asian and London trade Thursday morning, taking gold and silver to 1-week lows as commodity prices also dropped and stock markets stalled.

Shares in Apple Inc. were set to open New York trade 8% lower after the gadget giant reported weak Christmas sales.

 

New purchasing managers' data today showed business activity and sentiment in China rising to a two-year high.

Markit's PMI data also rose faster than expected everywhere in the Eurozone except France.

"The reason we are lower today [in gold and silver] is simple," reckons Marex Spectron's head of precious David Govett in a note.

"The market is long, the market is bored, the market is getting restless."

Longer-term however, "The investment case for gold looks robust," says Blackrock fund manager Evy Hambro, interviewed by
The Telegraph
, "with recent action by governments indicating that real interest rates are likely to remain negative in 2013, and the risk of inflation has increased.

"The behavior of central banks," adds Hambro, "suggests gold purchases look set to continue as diversification of currency exposure remains a key focus."

The US Federal Reserve's policy-making team will meet next Tuesday and Wednesday, and Fed chairman Ben Bernanke "can count on [his colleagues] to endorse the current program" of
quantitative easing
, says Nathan Sheets, Bernanke's senior international economics advisor for four years to 2011.

"Markets overreacted to the [Dec. meeting] minutes," reckons Dean Maki, chief US economist in New York for Barclays. "Nothing in the minutes said the Fed is going to be anything less than supportive of the economy in the coming months."

"[Bernanke] is going to stay the course and engage in QE," agrees Maki's opposite number at Bank of America-Merrill Lynch, Michelle Meyer, also quoted by Bloomberg.

Despite Sterling's 2007-2009 drop of 25%, "yesterday we found out that one UK official, [David] Miles of the [Bank of England], believes that the Pound has not fallen far enough," says Standard Bank's currency strategist Steve Barrow, pointing to Wednesday's release of UK monetary policy minutes.

Furthermore, says Barrow, yesterday's announcement of an "in or out" UK referendum on European Union membership in 2017 "play[s] into the hands of the Sterling bears."

Having sought a "safe haven" during the Eurozone crisis, "Some foreign direct investment and other capital flows into the UK could turn around as the crisis eases and the UK threatens to cut its ties with the EU," Barrow warns.

Meantime at the World Economic Forum of policy-makers and business leaders in Davos, Switzerland, "We are
buying gold
and will continue to pursue this course," said Russia's first deputy chairman Alexei Ulyukayev today.

Despite hitting the 10% target set by President Putin 7 years ago for gold as a proportion of Russia's reserve assets, "This is a course of asset diversification in a situation when investing in securities or deposits remains risky," Ulyukayev said.

Russia's sovereign gold reserves are now the 4th largest in the world, worth some $520 billion.

Exports of physical gold from Spain to the UK have meantime multiplied 10-fold in the last decade to €1.2 billion, a report in yesterday's
Expansion newspaper claimed, with gold pawned by cash-strapped consumers finding its way into large bars for gold investing
.

"The sale of second-hand gold is raising more than a billion Euros a year for Spanish families," the paper quotes one analyst.

Instead of heirloom jewelry, "Families here need the liquidity."

 

Adrian Ash

BullionVault

 

(c) BullionVault 2013

 

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 – and must be verified elsewhere – should you choose to act on it.