Precious Metal News
From South Bay Gold and Other Sources
February 16, 2012
Global demand for gold in 2011 rose to 4,067.1 tonnes (t) worth an estimated US$205.5 billion - the first time that global demand has exceeded US$200billion and the highest tonnage level since 1997, according to the World Gold Council’s Gold Demand Trends. The main driver for this increase was the investment sector where annual demand was 1,640.7t up 5% on the previous record set in 2010 and with a value of US$82.9 billion. The pre-eminent markets for investment demand in 2011 were India, China and Europe.
China and India remain the cultural heartlands of gold, generating 55% of global jewellery demand and 49% of global demand:
*India remains the largest country for demand with 933.4t, which is notable considering the volatility of the gold price and the weakness of the Indian rupee against the US dollar during the second half of the year. Gold jewellery accounted for over 500t and the investment market demand reached 366.0t. Indian demand accounted for 25% of total bar and coin demand worldwide.
*In China, annual demand of 769.8t was up 20% year-on-year as a result of increases in both jewellery and investment. The largest rise was in investment, where demand of 258.9t with the value of RMB84.5billion leaped 69%. China jewellery demand increased every quarter of last year and was the largest single jewellery market worldwide for the second half of 2011.
There was also a surge in demand in Europe with the region posting its seventh consecutive annual gain to 374.8t. Germany and Switzerland were the main drivers of growth in the region as the eurozone remains in turmoil and the need for asset protection continues to be a priority.
Central banks continued the trend established in 2010 of being net buyers of gold. Purchases by central banks soared from 77.0t to 439.7t. This reflects the need to diversify assets, reduce reliance on one or two foreign currencies, rebalance reserves and ultimately protect national wealth.
Marcus Grubb, Managing Director, Investment at the World Gold Council remarked,
“What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and western desire to protect assets against uncertainty on the other. Looking particularly at Asia, there was a major boost to the overall figures from the increase in Chinese demand, which is a trend that we see continuing over the next year. It is likely that China will emerge as the largest gold market in the world for the first time in 2012. What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”
February 7, 2012
Chinese gold imports from Hong Kong declined sharply in December from the record levels of November, but nevertheless full-year data reflect a continuing trend toward rising demand from the country, analysts said.
China does not publish official gold-trade data, so analysts monitor imports to mainland China from Hong Kong as a proxy. China’s gold imports from Hong Kong fell 62% in December to 38.8 metric tons from a record level of 102.8 in November and 85.7 tons in October, according to Hong Kong’s Census and Statistics Department.
Still, for the full year, imports from Hong Kong totaled almost 428 metric tons, compared to 119 in 2010.
“This is impressive testimony once more to China’s rapidly growing appetite for gold,” said a research note from Commerzbank. “Given the high level of domestic demand and in order to diversify its currency reserves, China is likely to continue to import large quantities of gold in future.”
Mu Li, a commodity research analyst with CPM Group who tracks the Chinese market, said a number of factors led to stronger Chinese fabrication and investment demand for gold in 2010, which carried over into 2011. These include elevated levels of inflation in China, “relatively low real interest rates” and concerns about the global macroeconomic picture, she said.
“In 2010, there were increased government measures against speculators in real estate,” she continued. “That helped some investors start to look to alternative assets, including gold.”
Other analysts also said rising incomes in China lead to gold buying.
As China converts toward a capitalistic society, the middle class has developed an “insatiable” appetite for not only precious metals like gold but also diamonds, said Mike Daly, gold and silver specialist with PFGBEST. The citizenry is encouraged to buy tangible assets to protect some of their new-found wealth. “They’ve become real gold bugs over there,” Daly said.
January 25, 2012
Gold rocketed above $1,700 an ounce Wednesday for the first time since mid-December when a statement from the Federal Open Market Committee suggested that policy-makers may be even more dovish than financial markets had expected.
Furthermore, gold generated upward technical momentum with a so-called “outside day” reversal higher on the charts and also by closing the pit session above a number of moving averages.
The FOMC indicated that it intends to keep interest rates at “exceptionally low levels” until late 2014, compared to guidance of mid-2013 previously. Additionally, the FOMC signaled that further accommodation would likely come from adjustments to the balance sheet, said Nomura Global Economics.
February gold futures, trading at $1,658 an ounce on the Comex division of the New York Mercantile Exchange just minutes before the FOMC statement, have since shot as high as $1,704.50. This was their first time above $1,700 since Dec. 12. As of 2:32 p.m. EST, the February contract was up $35.30, or 2.2% to $1,699.80. Other precious metals also rose, with March silver up $1.035, or 3.3%, to $33.01 an ounce. It hit a $33.32 high that was its most muscular level since Dec. 2.
Ahead of the meeting, a number of analysts said they envisioned a limited reaction by gold since the market has already factored in an expectation for low rates until mid-2014. But by pushing back their anticipated start of tightening to late 2014, policy-makers showed they are even more dovish than thought.
“We were all under the assumption that rates would be held at a low level until 2013, but now with the date extended to 2014, it’s inherently bullish for gold,” said Ralph Preston, senior market analyst with Heritage West Financial.
January 23, 2012
Surging Chinese gold imports reflect increased wealth but it also may be the result of consumer fears that inflation is higher than the government admits, according to an author who contends there are dark days ahead for the country.
In an interview on the sidelines of the Vancouver Resource Investment Conference here, Gordon Chang said China may be on the edge of serious economic slowdowns and said gold purchases may mirror some of the fears of the populace. Chang was also a speaker at the conference, which is sponsored by Cambridge House International.
Chang, the author of “The Coming Collapse of China” and a columnist for Forbes.com, said during the last couple of months there has been a surge of importation of gold into China. He said a lot of it is consumer driven and could be because there is an increase in wealth and people want to buy gold with their money.
But he said that wealth has been available for awhile. “The question is why are they buying gold in these quantities right now?” he asked. “I think largely there is a concern of inflation which is much worse than Beijing is willing to admit. For in December they said the inflation rate was 4.1% for consumer goods. It’s probably double that, and the food inflation is much higher.
“And I think people are really worried about that and now that they’ve got the ability to buy gold, they are buying gold in big quantities and I think that’s a sign of concern on the part of local Chinese as to what’s going on in China.”
January 11, 2012
China’s gold imports from Hong Kong surged to a record as consumers bought the metal before the Lunar New Year this month and investors sought to hedge against financial turmoil. Bullion rallied to a four-week high.
Mainland China bought 102,779 kilograms from Hong Kong in November, up from 86,299 kilograms in October, according to the Census and Statistics Department of the Hong Kong government. China doesn’t publish gold trade data.
Demand for gold is climbing in China as investors seek to protect their wealth against slumping property prices and equity markets amid an inflation rate above 4 percent. The nation overtook India in the third quarter as the largest gold jewelry market, according to the World Gold Council. The country is also the biggest producer. Bullion rose as much as 0.9 percent to $1,647.45 an ounce today, the highest since Dec. 13.
“China’s appetite for gold is very strong and growing,” said Tao Jinfeng, chief investment consultant at Haitong Futures Co., China’s largest brokerage by registered capital. “The few months before the Lunar New Year is typically the peak demand period for Chinese people.” The weeklong holiday begins Jan. 23.
Imports were profitable as prices in Hong Kong mostly traded at a discount to those in China in November. Gold for immediate delivery of 99.99 percent purity on the Shanghai Gold Exchange averaged 356.05 yuan a gram ($1,753 an ounce) in November, compared with an average of 434.68 Hong Kong dollars (353 yuan) at the Chinese Gold & Silver Exchange Society.
“There is always the possibility that some purchases were made by the central bank,” said Tao, rated the fourth-best China gold analyst in a Futures Daily and Securities Times poll.
January 10, 2012
Gold futures closed at the highest price in four weeks as a weaker dollar bolstered demand for commodities. Silver, platinum and palladium also surged.
The greenback retreated for the second straight day against a basket of currencies amid signs that European leaders are taking more steps to stem the region’s debt woes. The MSCI All- Country World Index of equities rose as much as 1.6 percent, and the Standard & Poor’s GSCI Spot Index of 24 raw materials advanced as much as 1.5 percent, the fifth gain in six sessions.
“The dollar is selling off, benefiting gold and commodities,” Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail. “Risky assets have been well bid in 2012 on the heels of relatively solid economic news in the U.S. and the belief that much of the bad news out of Europe has been priced in.”
Gold futures for February delivery advanced 1.5 percent to settle at $1,631.50 an ounce at 1:48 p.m. on the Comex in New York, the highest closing since Dec. 13. The precious metal rose as high as $1,61.40, the highest since Dec. 21.
China’s equities had the biggest three-session gain since October 2010 as slowing trade data boosted speculation that the government may loosen monetary policy to spur economic growth. The country is the world’s top user of industrial metals and the second-biggest gold buyer.
January 5, 2012
MKS Finance looks for gold to hit record highs in 2012, according to a forecast released Thursday.
The firm said it looks for fixings as high as $2,120 an ounce and an average of $1,808, with the precious metal boosted by geopolitical and sovereign-debt issues and more central-bank buying. However, the trade house also said that it looks for the market to be volatile, listing a forecast low for the year of $1,550.
The firm said it was “marginally bullish” on silver. It forecast that silver will average $36 an ounce in 2012, with a high of $50 and a low of $27.
Gold ended 2011 with a 12% gain from the prior year, MKS said.
“We expect most of the factors that drew gold higher in 2011 to continue to push the yellow metal towards a new all-time high in the course of 2012: geopolitical tensions in specific regions, sovereign-debt quality deterioration, (and) official-sector buying just to name a few,” MKS said.
The firm said it anticipates any crisis spreading over North America and Europe to further affect the liquidity in the banking system. However, such a scenario would have a two-fold impact on gold. It would initially prompt additional gold buying as a safe heaven. But, if liquidity becomes scarce, the market might start dishoarding gold scrap in larger quantities, MKS cautioned.
“Such a scenario would be even more likely if gold reached new highs,” MKS said. “Such a price correction could prompt some central banks to add on some gold to their reserves.
“The revolutionary mood that recently affected certain Middle Eastern and North African countries might be contagious to other regions and further motivate gold buying. To summarize, we expect gold to reach new highs in 2012 and to trade in a wider range. We expect 2012 to be another volatile year.”
January 4, 2012
Comex February gold futures prices ended the U.S. day session higher Wednesday, on follow-through buying strength from the solid gains scored on Tuesday. The gold market bulls are trying to regain some upside momentum following last week’s drubbing. The gold market was under mild selling pressure in early trading Wednesday, but traders stepped in to buy that weakness. February gold last traded up $14.80 at $1,615.30 an ounce. Spot gold was last quoted up $10.80 an ounce at $1,615.00. March Comex silver last traded down $0.427 at $29.145 an ounce.
The latest Iran-U.S. stare-down is also prompting some fresh safe-haven investment demand for gold. Reports Wednesday also said good Asian physical demand for gold has surfaced following the recent decline in prices.
The U.S. dollar index traded higher early Wednesday, which did limit the upside for the precious metals. The dollar index bulls have the overall near-term technical advantage, which is a bearish underlying factor for gold and silver. The dollar index has been and likely will continue to be a major “outside market” force for the precious metals. Remember, however, that if a geopolitical development heats up markedly and unexpectedly, both gold and the U.S. dollar can appreciate at the same time.
Crude oil prices traded steady to weaker Wednesday afternoon but did hit a fresh seven- month high earlier in the day. Crude oil prices trading above $100.00 a barrel is an underlying bullish factor for the precious metals.
The London P.M. gold fixing was $1,613.00 versus the previous P.M. fixing of $1,598.00.
January 3, 2012
Gold futures jumped the most in 10 weeks on demand for a haven following a report that Iran produced its first nuclear-fuel rod. Silver surged the most in five months as the dollar’s decline spurred a commodity rally.
A domestically-made rod was inserted into the core of Tehran’s atomic-research reactor, the Iranian Students News Agency said yesterday. The dollar fell against a basket of currencies as global manufacturing expanded, spurring demand for raw materials perceived as riskier assets. Blackstone Group LP’s Byron Wien, who correctly predicted last year’s gain in gold, said the metal will rally 15 percent in 2012 to $1,800 an ounce.
“Fear trade is back because of Iran,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Also, we are seeing buying across commodities because of the weaker dollar.”
Gold futures for February delivery climbed 2.2 percent to settle at $1,600.50 at 1:38 p.m. on the Comex in New York, the biggest gain for a most-active contract since Oct. 25.
The price rallied 10 percent last year, the 11th straight annual advance.
“Accommodative monetary policies throughout the developed world cause a renewed migration to hard assets by individual investors and sovereign-wealth funds,” Wien of Blackstone said today in a report.
December 30, 2011
Gold rose the most this month, capping an 11th straight annual advance, on speculation that demand will climb from jewelers and investors.
Gold fell 4.7 percent in the previous six sessions to the lowest since July 7 as the dollar gained against the euro, curbing demand for the metal as an alternative investment. That may boost seasonal purchases, said Marc Ground, a commodities strategist at Standard Bank Plc. In the first quarter of 2011, jewelry demand jumped 12 percent from a year earlier in India, the world’s biggest buyer, according to World Gold Council data.
“While we haven’t seen physical demand pick up yet, maybe people are anticipating it for next year,” Ground said in a telephone interview from Johannesburg. “January and February are usually good months in India, and a lower gold price might attract some buyers.”
Gold futures for February delivery climbed 1.7 percent to settle at $1,566.80 an ounce at 1:35 p.m. on the Comex in New York, ending a six-session slump that was the longest since March 2009.
December 29, 2011
Gold futures closed lower Thursday as gains for U.S. stocks on the heels of upbeat economic data dulled investment demand for the precious metal, sending prices lower for a sixth-consecutive session.
The consensus is that the U.S. economy will grow too slowly next year to bring unemployment down quickly. So what could make the year turn out better — and conversely, what could go wrong?
Traders are “liquidating their gold positions before year end, locking in last-minute profits in a mad rush to raise capital ahead of the last 2011 market close,” said Seth Rabinowitz, who covers commodities as a partner at Silicon Associates.
“Traders don’t want to watch the ball drop while worrying they have insufficient capital to start the new year on their strongest foot, particularly while pondering otherwise uncertain profits from the previous year,” he said.
The February gold futures contract GC2G -1.04% fell $23.20, or 1.5%, to settle at $1,540.90 an ounce on the Comex division of the New York Mercantile Exchange. Futures prices have now suffered a six-session loss of 4.7%, but they’re still on track for a gain of over 8% for the year.
“It is worth remembering that, despite the recent correction, gold is still on course to post its eleventh consecutive year-on-year gain, and that given the ongoing debt problems facing many economies, record-low interest rates and the highs in gold this year, those with a longer-term outlook could view current levels as a buying opportunity,” said James Moore, analyst at TheBullionDesk.com, in a note.
December 20, 2011
Spot gold prices fell 6.6% to $1,602/oz in the week ending 16 December 2011, their biggest losing week since early October. We attribute some of the impetus in the selling pressure to year-end portfolio adjustments, a flight to cash as concerns over the European sovereign debt crisis mounted in the face of further ratings downgrades and a related strong safe haven rally in the US dollar (USD). However, this sharp fall continued downside price pressure evident in Q4 2011 that has resulted in a decline in prices on a quarter-to-date basis of 1.5%.
This quarterly decline has reinforced the impact of the sharp falls in gold prices registered in September 2011 after prices reached a new all-time high of US$1,951/oz on September 6. This has raised market fears that the September high and rally in early November 2011 to US$1,798/oz mark the twin peaks in the ten-year bull market for gold, and effectively mark its conclusion.
Our view is different. While recognizing the technical damage sustained in recent weeks, we do not see the bull market as having reached its ultimate peak at this time. While seasonal and non-gold market factors have undoubtedly played an important role in the two corrective waves of selling since September 2011, the unusual phenomenon of negative gold lease rates and falling gold prices points to other factors at work in the gold market. We conclude in this report that these probably relate to bank funding stress. While this is expected to continue into 2012, recent coordinated actions by six central banks, and separate actions by the ECB, suggest that non-gold-related measures to ease access to US dollar swaps will gradually ease the downside pressure on the gold price. We expect this corrective phase will conclude when the Federal Reserve adopts a new round of quantitative easing in H1 2012, weakening the US dollar and reigniting the safe haven trade for gold that is likely to see a renewed and successful challenge to the September 2011 high.
December 20, 2011
Gold rose for the second time in three sessions as a weakening dollar boosted demand for the metal as an alternative asset.
The euro advanced against the U.S. currency after Europe pledged 150 billion euros ($196 billion) to the International Monetary Fund to help stem the region’s debt crisis, and as the European Central Bank widened its support for bond markets. Bullion also gained after German business confidence unexpectedly rose for a second month in December.
“We moved up on a better-bid euro, after the headlines that the IMF may put in more funding to help Europe,” Bart Melek, an analyst at TD Securities in Toronto, said in an e- mail. Investors buoyed by signs of progress in Europe had a bigger appetite for risk and were more willing to bet on assets that may bring better returns than the dollar, which is often sought as a haven during market turmoil, Melek said.
Gold futures for February delivery climbed 1.3 percent to settle at $1,617.60 an ounce at 1:36 p.m. on the Comex in New York. Bullion fell 6.9 percent last week as the dollar rallied against the euro. It has gained 14 percent this year.
The euro rose as much as 1 percent today against the dollar. The 30-day correlation coefficient between gold and the euro is at 0.59, compared with minus 0.35 on Oct. 7, data compiled by Bloomberg show. A figure of minus 1 means the two tend to move in opposite directions, and 1 means they move in lockstep.
“Gold below $1,600 is very attractive to investors who still believe in the longer-term uptrend,” said Yang Shandan, a senior trader at Cinda Futures Co., rated the second-best China gold analyst in a Futures Daily and Securities Times poll. “The dollar will remain a key driver of near-term prices.”
December 19, 2011
While demand in India remains subdued, bullion demand in Europe remains brisk and there are signs that Chinese demand has picked up and China is buying the dip.
"In the very short-term, gold below $1,600 is very attractive within China," UBS noted today.
"This can be seen from the sharp increases in Shanghai Gold Exchange volumes last week. Combined SGE turnover last week was the strongest since mid-March and SGE premiums versus London hit $21, premiums not seen since mid-October” said UBS’ Edel Tully.
Central banks are also almost certainly buying gold at these levels as they have been doing in recent months on corrections.
Absolutely nothing has changed regarding the fundamentals driving the gold bull market despite this most recent sell off.
Indeed, the sell off was expected - although the scale of the selloff has surprised some.
The fundamental factors driving the market in 2012 remain the same – the Eurozone and global debt crisis, negative real interest rates and the debasement of fiat currencies being some of the primary drivers.
Rehypothecation and the serious risks that a massive period of deleveraging poses to the global financial and economic system is likely to be a very important factor in 2012 which will lead to heightened volatility but is another positive for gold prices in the long term.
Due to the continuation of the fundamental factors driving the market in 2011, most serious analysts of the gold market have not revised down their outlook for prices in 2012.
December 17, 2011
What a week for gold! The yellow metal continued its fateful decline, breaking through key resistance levels as COMEX volumes surged to their highest levels since August, when gold fell 11% from its nominal all-time high of $1,914. The widely followed Dennis Gartman noted the sidelines look attractive for now,while UBS’ gold strategist Edel Tully said this looked like a nice entry point for longer-term investors as physical demand is picking up.
Gold prices fell 6% this week to $1,593 an ounce at the COMEX. The marked decline exceeds the fall in the S&P 500, which was down 2.8% for the week, and the euro’s 2.3% slide against the dollar to $1.3036. Ten-year Treasury yields fell 17 basis point to 1.85%.
The breakdown has definitely delivered a blow to those who saw gold as a safe haven, but it by no means suggests gold, as an asset class, is done. Both UBS’ Edel Tully and Dennis Gartman agree that in the medium-to-long run, gold still looks attractive.
Tully explains the breakdown as a consequence of breached technical support levels. “There is little doubt that much of the momentum [behind this week’s action] was driven by technical selling,” she said, “and the physical demand which in previous weeks and months would have put a floor under prices wasn’t sufficient to do so.”
The key driver, she explained, was Wednesday’s close below $1,609.20 an ounce, “the first confirmed threat to the uptrend in gold and an early sign that broad bullish sentiment may be turning.” Gartman agrees, to a certain extent, noting the violent sell-off was the single largest he can recall.
Decmber 16, 2011
Yesterday when gold was trading in the $1570 we suggested that based on the very volatile shifts in the funding environment for gold, whereby the gold lease rate had moved from record negative to borderline flat, the plunge in the yellow metal is likely coming to an end. Less than 24 hours later, gold has just passed $1600 yet again. And as the following note from Sandeep Jaitly of First International Group (whose interview with Max Keiser exposing economics for fraud back in June was quite the hit) observes, by analyzing the continued funding unwind pressure, the recent liquidation move in gold is one that has to be taken advantage of. To wit: "The movements in the bases confirm that the recent downward move in gold against Dollars was as a result of Dollar funding pressures. Gold was lent on the swap against United States Dollars. This swap must be unwound and where a bid for gold was sought to raise Dollar liquidity, an offer of gold will be sought to unwind the swaps. The co-bases for Feb-12 and Apr-12 gold contracts are starting to advance – an exceptionally bullish signal following the selloff and a sign that physical buying is being prompted by these lower prices. It would be very prudent to accumulate gold against United States Dollars aggressively over the next fortnight."
December 15, 2011
Gold extended a rout into a fourth day as concern that Europe’s debt crisis is escalating boosted the dollar, raising the prospect that the precious metal may enter a bear market. Platinum dropped to a two-year low.
Spot gold dropped 0.5 percent to $1,566.55 an ounce at 1:46 p.m. in Singapore. The price lost 8 percent in the preceding three days, and is set for the worst weekly fall since the period to Sept. 23. The February-delivery contract dropped as much as 1.2 percent to $1,567.60 on the Comex.
The dollar rose to an 11-month high against the euro yesterday on signs of increased funding stress as Europe battles its debt crisis, driving spot gold to $1,563.38, the lowest level since Sept. 26. Gold dropped below its 200-day moving average yesterday for the first time in almost three years, indicating to some analysts that more declines may be in store.
“People are fearful of everything that’s going on, so once something starts selling off, selling begets selling,” said Rachel Benepe, a portfolio manager at First Eagle Investment Management LLC. “The safe haven of choice continues to be the U.S. dollar,” Benepe said in a Bloomberg Television interview.
Cash platinum fell for a fourth day, losing as much 3 percent to $1,378.50 an ounce, the lowest level since Nov. 13, 2009. Palladium also dropped for a fourth day, declining 0.5 percent to $615.25 an ounce.
December 14, 2011
Gold tumbled the most in 11 weeks as the Federal Reserve refrained from taking more stimulus measures and as a stronger dollar curbed demand for alternative assets. Silver plunged more than 7 percent.
The dollar rose to an 11-month high against the euro as Italian borrowing costs increased at a debt auction. The Standard & Poor’s GSCI index of 24 commodities dropped as much as 2.7 percent. The Federal Reserve yesterday said the U.S. economy is maintaining its expansion and refrained from taking new action to bolster the economy.
“There is turbulence across the commodity market because of the strength in dollar,” Jochen Hitzfeld, an analyst at UniCredit SpA in Munich, said in a telephone interview. “No further stimulus from the Fed is bearish for the market.”
Gold futures for February delivery dropped 3.2 percent to $1,609.50 an ounce at 10:31 a.m. on the Comex in New York, heading for the biggest slide since Sept. 23. Earlier, prices slumped to $1,602.40, the lowest since Oct. 5.
Gold fell after the Fed “statement failed to hint at further quantitative easing despite acknowledging slowing global growth,” Suki Cooper, an analyst at Barclays Capital in New York, wrote in a report.
December 13, 2011
Gold futures fell, extending a slump to a seven-week low, as the dollar’s rally eroded demand for the precious metal as an alternative investment.
The euro fell to an 11-month low against the greenback on concern that European leaders won’t agree on ways to expand the region’s rescue funding as debt-strapped nations struggle to fund deficits. Yesterday, gold slumped 2.8 percent, the most in three weeks.
“The dollar’s strength is working against gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “We will continue to see liquidation because of the uncertainty surrounding Europe.”
Gold futures for February delivery dropped 0.3 percent to settle at $1,663.10 an ounce at 1:43 p.m. on the Comex in New York. Earlier, the price touched $1,654.40, the lowest for a most-active contract since Oct. 25.
Imports by India, the largest gold consumer, may decline as much as 16 percent from a record as the rupee’s plunge to an all-time low boosts local prices, according to the Bombay Bullion Association. Purchases may fall as low as 800 tons this year from 958 tons in 2010, Prithviraj Kothari, the group’s president, said yesterday.
December 12, 2011
Comex February gold futures prices are trading sharply lower, hit a fresh three-week low and have dropped below important psychological support at the $1700.00 level Monday morning as the bulls are fading. The precious metals are seeing selling pressure coming from a stronger U.S. dollar index and a generally weaker raw commodity sector to start the trading week, following an unimpressive market place assessment of the just-completed European Union summit in Brussels. February gold last traded down $33.70 at $1,683.30 an ounce. Spot gold last traded down $31.50 an ounce at $1,680.25. March Comex silver last traded down $0.928 at $31.325 an ounce.
The market place has given a cool reception to the latest European Union summit meeting in Brussels that concluded on Friday with no major breakthrough on the EU debt crisis—just proclamations to implement new fiscal and other rules to try to shore up their financial problems in the long run. The U.K. was a holdout on the new proclamations. The market place on Monday morning perceives the latest EU developments as nothing real significant to solve the present EU sovereign debt problems. So the crisis rolls on and it’s a “risk off” trading day so far Monday. That’s bearish for the precious metals. Gold has been acting more like a risk asset in recent weeks, and less like a safe-haven investment asset.
The U.S. dollar index is solidly higher Monday morning as the Euro currency takes a hit on the market place’s reaction to the EU summit results. The dollar index bulls still have the solid overall near-term technical advantage, which is a major bearish factor for the precious metals markets. Crude oil and many other commodity market prices are trading weaker Monday morning, which is also negative for the precious metals. Crude oil has been and will continue to be an important “outside market” for the precious metals.
December 9, 2011
Gold rebounded from the biggest decline in more than two weeks as European leaders worked to agree on a plan to save the euro and defuse the debt crisis. Palladium was set for a second weekly advance.
Immediate-delivery gold rose as much as 0.4 percent to $1,715.10 an ounce and traded at $1,713.57 at 9:18 a.m. in Singapore, paring a weekly drop. The February-delivery contract advanced 0.2 percent to $1,716 an ounce on the Comex.
Leaders are seeking to agree on a “fiscal compact” at a two-day summit in Brussels to make it possible for the European Central Bank and International Monetary Fund to step up contributions to the rescue effort. No agreement has yet been reached, said two officials familiar with the talks.
“Any rise in gold today is probably just a technical bounce,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone. “Precious metals will be in a bit of a holding pattern until we find out if the talks in Europe have borne any fruit.”
The ECB damped speculation yesterday that it would step up debt purchases, boosting the Dollar Index 0.4 percent as gold declined 1.9 percent, the biggest fall since Nov. 21. The six- currency gauge was little changed today.
December 7, 2011
Gold futures rose for the first time in three days as the European Central Bank was said to be planning to announce measures to bolster lending, reviving demand for the precious metal as an inflation hedge.
Steps being considered include loosening collateral standards to give institutions more access to cheap ECB cash and offering them longer-term loans to aid the flow of credit to the economy, said three European officials, who spoke on condition of anonymity because the discussions are private. Two said an interest-rate cut is likely. Earlier, the metal fell as much as 0.5 percent.
“The jump in gold seemed to coincide with the news out of Europe, as gold has become a barometer for sentiment on Germany and what the ECB is capable of doing,” James Dailey, who manages $215 million of assets at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in a telephone interview. “It gets down to whether we’re going to have a bank-driven funding crisis, which would be bearish for gold.”
Gold futures for February delivery rose 0.4 percent to $1,739 an ounce at 9:56 a.m. on the Comex in New York. The metal dropped 1.1 percent in the previous two days. Before today, the price climbed 22 percent this year, partly because the U.S. Federal Reserve has kept its benchmark interest rate at a record low.
Silver futures for March delivery dropped 0.1 percent to $32.71 an ounce. Earlier, the price declined as much as 1.5 percent. Before today, the metal climbed 5.8 percent this year.
December 6, 2011
Japanese Finance Minister Jun Azumi will be rewarding investors who buy more than 10 million yen ($129,000) in reconstruction bonds with gold in the government’s latest attempt to bolster demand for the debt.
Individual investors who hold the bonds for three years will be eligible for a gold commemorative coin valued at 10,000 yen, the Finance Ministry said in Tokyo today. At 15.6 grams, (0.55 ounces), it would be worth about $948 based on prices for the precious metal. Only a limited number of coins will be issued, the Finance Ministry said in a statement.
Azumi, whose hometown was devastated by the March 11 disaster, said today he bought 1 million yen of the debt to support rebuilding efforts from the March 11 earthquake and tsunami. Offering gold bolsters the value of the return on the debt, which will be at 0.05 percent for the first three years.
Silver coins weighing 31.1 grams valued at 1,000 yen will be distributed to those who own more than 1 million yen of the bonds, the government said. The coins will be offered for debt going on sale in March. All investors receive a thank-you note from the minister, who showed his to reporters in Tokyo today as proof of his purchase. Chief Cabinet Secretary Osamu Fujimura also bought the bonds, Azumi said, without saying how much.
December 5, 2011
Gold prices dipped on Monday, after posting their sharpest weekly rise in more than a month, in cautious trading ahead of a meeting of European Union leaders to come up with a firm plan to tackle the euro zone debt crisis.
The two-year-old debt crisis has not only pushed a few euro zone nations to the brink of bankruptcy, but also threatened to split the single currency bloc and shake the global economy.
French President Nicholas Sarkozy and German Chancellor Angela Merkel will meet to align their positions on closer fiscal integration of the region, before a European Central Bank meeting and a European Union summit later in the week.
"I think politicians across the board recognise there is a huge issue here that needs sorting out. Whether Europe can deliver is still an open question," said Natixis analyst Nic Brown. "There is likely to be a fair amount of volatility on the political front this week."
December 2, 2011
The Bank of Korea’s continued diversification of its foreign exchange reserves is a bullish factor which may have led to the price gains today. The central bank of South Korea announced that it had purchased 15 metric tonnes of gold in November to raise its reserve of bullion in an effort to diversify its portfolio of its foreign reserve investment and reduce risks caused by market volatilities. According to the Bank of Korea (BOK), it made a purchase of 15 tons of gold last month to increase the nation’s gold reserves to 54.4 tons worth $2.17 billion as of the end of November. It boosted the size of its gold reserves by US$850mn in November, up a massive 39% from the previous month. Its total gold reserves are now worth US$2.17B. The purchase was the central bank’s second acquisition of gold this year. It bought 25 tons of bullion in June and July for the first time in 13 years. Based on the October reading, Korea is the eighth-largest holder of foreign exchange the world behind China, Japan, Russia, Taiwan, Brazil, Switzerland and India. The Bank of Korea said its gold holdings account for just 1% of its foreign-exchange reserves. “The BOK purchased gold last month in a bid to diversify its portfolio of foreign exchange reserves,” Lee Jung, head of the investment strategy team at the BOK’s Reserve Management Group, told reporters. "Demand for gold is increasing as a hedge against global inflation amid the persistent sovereign-debt crisis in Europe," Lee was quoted as saying.
November 30, 2011
Comex February gold futures prices are trading solidly higher on the just-announced move by the major central banks of the world to increase liquidity in the financial markets. Gold prices had been trading near steady levels before the surprise move by the central banks. The market place is also more stable so far this week, which is also a bullish factor for the gold market as the yellow metal is acting like a risk asset recently. February gold last traded up $20.50 at $1,739.20 an ounce. Spot gold last traded up $21.50 an ounce at $1,737.50. March Comex silver last traded up $0.46 at $32.41 an ounce. The moves by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and other central banks of the world serve notice that they are in unison on making sure the European Union debt crisis does not spread into a worldwide financial contagion. Earlier in the day China announced it is dropping its reserve requirement ratio for banks by 0.5%. That in effect eases monetary policy and is an overt signal from China that it wants its economy to grow and it will accept more commodity imports to achieve its better economic growth. The coordinated central bank move and the China move Are very significantly bullish for commodity markets, including the precious metals.
November 7, 2011
Remember how virtually all "experts" speculated that the drop in the price of gold would set off a liquidation cascade in China, where everyone was "loaded to the gills" and at the first hint of deflation would dump all holdings (not to mention that economic Ph.D. proclaimed the gold "bubble" popped two months and $200 lower)? It seems that as so often happens when all experts agree on something, it is precisely the opposite that happens. The FT reports that "Chinese gold imports from Hong Kong, a proxy for the country's overall overseas buying, leapt to a record high in September, when monthly purchases matched almost half that for the whole of 2010....After hitting a nominal all-time high of $1,920.30 a troy ounce in early September, the yellow metal fell to a three-month low of $1,534 an ounce later in the month. Chinese investors snapped up the metal as prices fell." Fair enough: this means the natural bid under gold will pretty much always be there, especially since the SHCOMP plunged at the same time, and if there was truly cross asset liquidation, imports would hardly rise. Which begs the question: if not China, then who sold? Was the move purely a function of fears that Paulson was liquidating? Or were rumors that various central banks are liquidating gold, actually true? We will likely find out when the next WGC report is filed. We will also know that the Chinese number for total gold holdings is grossly under-reported.
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