May
23rd
Bullion Rallies Despite Losing US Fed Prop as Stock Markets Sink on Weak China Data
By Adrian Ash
Both gold and silver rose in
Asian and London trade Thursday morning, defying a sharp slide in
global stock markets to gain 3.0% rally from yesterday's sharp
sell-off.
Commodity prices fell as major government bonds rose but weaker
Eurozone debt slipped, pushing interest rates higher.
Tokyo's Nikkei index – up by 85% from November – dumped more than
7% after new data showed a surprise contraction in
China's manufacturing sector.
Private "retail" investors have "abducted" the Japanese stock
market, accounting for more than a third of recent volume,
according to brokers quoted by the Financial Times.
"[Gold's] inability to hold the highs is bearish," says the
latest technical chart analysis from Scotia Mocatta.
"[Wednesday's] intra-day rally is indicative of bargain hunting
in gold rather than a change in trend," the bullion bank adds,
pegging support at the April 2013 low of $1323.
Like Barclays Capital's analysts, Scotia now puts short-term
resistance at yesterday's sudden spike of $1412.
Gold prices rose Thursday morning to breach $1390 per ounce once
again, recovering two-thirds of Wednesday's plunge from that
1-week high – made as US Federal Reserve chairman Ben Bernanke
was testifying to the Senate on the likely direction of Dollar
interest rates and quantitative easing.
Having warned against "a premature tightening of monetary policy"
however, Bernanke was then asked if the Fed might start reducing
its $85 billion in monthly QE purchases of government debt and
mortgage bonds before Labor Day on Sept. 1st.
"I don't know," Bernanke replied.
Minutes from the US central bank's latest policy meeting also
showed one participant wanting to reduce the level of QE
"immediately".
"Not having the future support of the Fed," says Edward Meir's
note for INTL FC Stone, "will remove a major prop for gold."
"It seems the market is now squarely focusing on the September
17-18 [policy] meeting for the Fed to make its move," reckons ING
bank's analysts.
"Together with expectations of tightening quantitative easing,"
says Mitsubishi analyst Jonathan Butler – also quoted by Reuters
– "the general trend for a modest economic recovery in the
developed markets is going to fuel growth in the equity markets
and the Dollar.
"That should see gold coming under pressure."
"The momentum is strongly negative," says Edward Lashinski,
global strategist at RBC Capital Markets in Chicago.
"The market understands that gold is no longer a safe haven."
On the supply side meantime, "Being more profitable is better
than being bigger," said Jamie Sokalsky, CEO of the world's
largest gold miner, Barrick, at Bloomberg's Canada Economic
Summit in Toronto on Tuesday.
Also forecasting new record highs for the gold price thanks to
central-bank demand and the state of the global economy, Sokalsky
mooted "divesting" some smaller, higher-cost mines to focus on
more efficient projects.
In particular, the giant Pascua-Lama project in Chile – valued at
some $8.5 billion, and already eating some $5bn in costs – has
been delayed by environmental concerns, says Canada's Financial
Post.
"Barrick is considering all its options at Pascua-Lama," says the
paper, "including outright suspension."
At current gold prices around 10% of gold mines globally will be
making losses, according to Thomson Reuters GFMS data.
"We would initially expect the oldest mines closing," says a
special report from Japanese trading house Mitsui's metals
strategist David Jollie in London, "as they are in many cases
coming to the end of their operating life."
Gold mining companies are likely to avoid closing newer projects
"as long as possible," Jollie says. But if the gold price stays
low enough long enough, "closures will happen."
Adrian Ash
(c) BullionVault 2012
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
May
22nd
Asian Gold Premiums Hit New Highs as Europe Urged to Start Aggressive QE
By Adrian Ash
Bullion prices rose throughout Asian and early
London trade on Wednesday morning, touching $1398 per ounce for
the third time this week and recovering 4.4% from Monday's
one-month low.
Silver rose more steadily, and was capped
below $22.80 as energy prices slipped and agricultural
commodities held flat.
Tuesday's retreat in the gold price today pushed gold
bar premiums in Hong Kong to new record highs says
Reuters, hitting $6 per ounce over and above international
benchmark prices.
"Singapore premiums rose to $5 per ounce," the newswire adds,
with Asian demand continuing to outstrip local supplies of gold
kilo bars – the preferred investment form in the Far East.
"Expect to see more choppy trading in gold heading into
Bernanke’s speech," says one bullion broker in a note, pointing
to the Federal Reserve chief's testimony to Senate today on US
monetary policy.
Asked yesterday on Bloomberg TV whether the Fed will start to
cut its $85 billion program of monthly quantitative easing, New
York Fed president William Dudley said "It really depends on
how the economic outlook evolves...It's too soon to make that
determination."
Even if the US central bank does slow its purchases of
government debt and mortgage bonds with newly created money,
Dudley said the Fed would only be "adding less stimulus" rather
than actually "tightening" monetary policy.
"[Bullion] market participants, reading between the lines of
Bernanke’s testimony, might infer a signal about an early end
to quantitative easing," warns Standard Bank in London.
"That would keep gold under pressure."
"Given the level of negativity in the atmosphere," says London
market-maker UBS, "a much stronger move is needed [in the gold
price] to materially threaten the resolve of shorts" – meaning
speculative traders who now hold a record number of bets that
gold will fall on the US futures market.
"Many shorts still feel comfortable given the persistently weak
sentiment. There may well have been a good chunk of shorts
initiated or re-established near this week’s highs."
Dudley's colleague James Bullard, president of the St. Louis
Fed, meantime warned Europe yesterday that it needs to start
quantitative easing to avoid a long, Japan-style depression.
"You should worry about it, and then take policy action to
avoid it," said Bullard. "One way to get stuck would be to be
passive in this situation and not take some aggressive action
to try to get inflation back."
"Europe can draw lessons from Japan on the dangers of half
measures," agreed Bank of Canada governor Mark Carney yesterday
in his final speech before moving to lead the UK's Bank of
England in July.
Japan's banking crisis began in 1989. More than two decades
later, "to end its debilitating legacy," says Carney, "Japan
has just embarked on a bold policy experiment" – doubling its
balance sheet with the most aggressive 'quantitative easing'
yet seen.
"Governments have [already] been engaging in...printing money,"
says Marshall Gittler, former head of forex at Deutsche Bank
Private Wealth Management and now head of forex strategy at UK
brokerage IronFX, writing for CNBC.
"But until [bank] loans have been made, [new central bank]
reserves are just potential money."
Challenging former UBS analyst and now precious metals
strategist John Reade at Paulson & Co. – who wrote in the
Financial Times last month that "the expectation of global
paper currency debasement makes gold an attractive long-term
investment" – Gittler says that
"While the gold bugs wait for hyperinflation, the global
economy slides first into disinflation and then, who knows,
perhaps deflation."
Gold trading in India – the world's No.1
consumer nation – meantime eased off Wednesday, according to
local reports.
After last month's festival season and the imposition of new
import controls by the central bank in a bid to cut India's
trade deficit, gold prices edged lower today, even though
"supplies are difficult to get and premiums are still high" for
gold bars according to one major dealer
Adrian Ash
(c) BullionVault 2012
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
May
21st
Short Squeeze Fades in Precious Metals, Gold Miner Adds to Hedges, Contrarians Spot Time to Buy
By Adrian Ash
The price of both silver and
gold slipped back in London on Tuesday morning,
cutting into yesterday's rapid gains from 4-year and 1-month lows
respectively.
World stock markets stalled after hitting a series of near and
new all-time highs so far this month.
The British Pound fell hard – supporting the gold price in
Sterling above £910 per ounce – after new data showed a slowdown
in consumer price inflation.
"These stunning upside reversals off fresh lows [in gold and
silver] were somewhat justified," says a note from brokers INTL
FC Stone, "given that both were quite oversold."
Monday's sudden leap in the silver and gold price, which took
only a few minutes, was sparked by a "classic short
squeeze" according to several analysts today.
Bearish bets in gold futures rose last week to a record holding
for speculative traders, breaking 100,000 short contracts – which
profit if prices fall – for the first time on record, according
to US regulatory data.
Monday's dramatic $30 jump in the gold price equaled a 2.2% rise,
but saw silver jump faster – up 3.9% in a matter of minutes.
Across in Asia, "Physical support for the price is currently
huge," says another analyst in a note, "but will not last forever
in our view.
Two weeks after both India's gold-buying festival of
Akshaya Tritiya and tight restrictions on Indian
gold imports, "There is no action in the market," said one Mumbai
bank dealer to Reuters earlier.
"Everybody has stopped consignment imports. [So] premiums are
still on the higher side in the domestic market" at up to $20 per
ounce above the world's benchmark gold price for London
settlement.
On the production side today, London-listed gold miner
Petropavlovsk Plc – whose shares have lost
two-thirds of their value since New Year, and whose executives
have waived 2013 bonuses to help slash costs – extended the gold
hedging program it began in February.
With output forecast around 21 tonnes for the next 12 months,
Petropavlovsk has now hedged 15 tonnes of that
gold, locking in a price of first $1663 and then $1408 per ounce.
Forward sales by larger gold producers grew throughout the 1990s
bear market. The industry's total "hedge book" reached more than
2,900 tonnes in 2001. Leading analysts GFMS said earlier this
month they don't foresee a big move back towards gold hedging by
miners any time soon.
As a sector, North America's major listed gold mining stocks have
dropped half their value since the price of bullion peaked in
September 2011.
The gold price today stood 28% lower from then, trading at $1375
per ounce by lunchtime in London.
"We have been tempted [by gold mining stocks] for a long time,"
says Robin McDonald of Cazenove's $1.6 billion Multi-Manager
Diversity fund, speaking to TrustNet, and "we saw the fall of 22%
back in April as the right time."
Now adding Blackrock's Gold & General fund
to his holdings, "People have become wholly disillusioned with
the asset class," McDonald says.
"In my experience, when nobody has anything nice to say about an
asset class,from a contrarian standpoint, it's time to buy."
Looking at silver bullion on Monday, Bank of America Corp's
Michael Widmer in London told Bloomberg that "A lot of the
investors who bought silver on a view of Dollar debasement or
inflation picking up massively I think are now disappointed.
"The other point," Widmer added, "is that silver industrial
demand in [this global] mood of subdued economic growth is not
doing particularly well either."
Meantime in the stock market, investment bank Goldman Sachs has
raised its target price for the S&P 500 index – currently at
1665 – to 1750 by year's end, with further advances to 2,100 in
2015.
"We forecast dividends will rise by 30% during the next two
years," says Goldmans. "Further expansion [in the price/earnings
ratio, with stocks rising faster than revenues] is possible if
interest rates stay low, growth improves."
After holding US interest rates unchanged between zero and 0.25%
for the 53rd month running at the Federal Reserve's last policy
meeting, central bank chief Ben Bernanke is due to testify
Wednesday to the Joint Economic Committee of the Senate.
"Bernanke is unlikely to hint at a tapering of [quantitative
easing] bond purchases," says today's Commodity Daily from the
analysis team at Standard Bank in London, "which would be a
positive for gold.
"Below $1360 the metal represents a reasonable buying
opportunity."
Adrian Ash
(c) BullionVault 2012
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
May
20th
Fresh Plunge in Precious Metals Natural as Bearish Money Managers Hold Upper Hand Over Asian Household Buyers
By Adrian Ash
Wholesale prices for gold and silver rallied
from a fresh plunge in early London dealing on Monday, rising to
stand unchanged and 2.3% lower respectively from the end of last
week's trade by lunchtime.
Asian stock markets closed sharply higher, even as the Japanese
Yen reversed Friday's drop to new 4-year lows against the US
Dollar.
Commodities ticked lower as did major government bonds. Silver
prices today touched the lowest level in 44 months, dropping
within 25¢ of $20 per ounce.
This morning London's silver Fix came in at
$21.66, very nearly one-third below the start of 2013.
Initially extending Friday's late drop to touch $1340 per ounce
for only the second time since January 2011, gold rallied from
new 5-week lows for Euro and British Pound investors.
"Investors are very bearish at the moment," said Bruce Ikemizu at
Standard Bank's Tokyo office to Reuters this morning.
"The stock market and the Dollar are quite strong. It's a natural
move for investors to switch their money from commodities to
equities."
Versus private households buying gold coins and
small bars, most notably in India and China,
"Financial investors hold the upper hand," says a note from
Denmark's Saxo Bank, "[with] hedge funds now holding the biggest
ever bet on falling prices."
New data released Friday showed the net long speculative
position in US gold derivatives held by money managers
and other non-industry players as a group falling to new
four-and-a-half-year lows in the week-ending last Tuesday.
Down to the equivalent of 214 tonnes, the difference between
bullish bets and bearish bets on New York gold futures and
options has shrunk by 55% since the start of 2013, driven by a
doubling in the number of "short" contracts.
The amount of bullion held to back shares in exchange-traded gold
trust funds shrank again Friday, taking the combined total of the
GLD and IAU products down 16
tonnes for the week at 1,230 tonnes altogether.
The two largest US gold E.T.F.s have now shed 22% of their
holdings since New Year.
Despite silver E.T.F. holdings remaining much
steadier, the silver price "is trekking a similar path to gold,"
reckons analyst Yang Xuejie at Galaxy Futures Co. in China – a
division of a state-owned brokerage group.
More particularly, "Investment demand is slowly falling and there
are doubts about industrial demand, which is the primary driver."
Some 60% of annual offtake in the silver market goes to
industrial uses, rather than jewelry and other store-of-value
forms like coin or bar. That compares to less than 15% for gold.
Solar panel demand, which has helped plug some of the gap left by
the collapse in photographic demand for silver over the last
decade, flat-lined in 2012 according to analysis from French
investment bank and bullion dealer Natixis.
Back in gold bullion, "We have some left over consignment
stocks," an Indian importer told Reuters this morning, pointing
to the Reserve Bank's latest import restrictions to the world's
largest gold-consumer market.
Local premiums over and above the world's benchmark London
pricing doubled and more in response to the Indian central bank's
new rules, imposed a week ago.
"For the time being we are catering to jewelers," the importer
speaking to Reuters added today. But despite this tightness in
domestic supplies, Indian gold prices continued to fall on
Monday, dropping 1.5% in line with international prices.
The drop in Indian gold prices is hurting the
gold-backed consumer loans sector, India Today reports, with
non-performing loans – raised with the pledge of gold jewelry as
collateral – tripling over the last year to 1.5% of the largest
gold-loans book, built by Muthoot Finance.
Shares in competitor Manappuram Finance, India's first
stockmarket-traded gold loan company, have dropped by 40% in the
last month, says the paper.
"Gold, I think, is deep in our psyche and to take people away
from gold, greater steps are needed," says State Bank of India
chairman Pratip Chaudhuri, quoted Saturday by ZeeNews.
Commenting on the central bank's campaign to deter gold demand –
first by imposing those new import restructions, but also by
asking commercial banks to promote coins and bars less
aggressively, in a bid to reduce India's trade deficit – "I don't
know whether it would lead to reduction in consumption,"
Chaudhuri says.
"In India there is such a fascination for gold. What stops people
from going to the jewelry shops and banks?"
Adrian Ash
(c) BullionVault 2012
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
May
17th
Pension Funds Selling Gold ETFs, Dollar Weakness Seen Offering Only Hope Short Term
By Adrian Ash
Gold prices failed to hold a rally above $1380
per ounce in London on Friday morning, trading 5% down for the
week as world stock markets held steady.
Both the Euro and British Pound also cut their mid-week rallies
against the Dollar, holding gold prices at €1070 and £904 per
ounce respectively.
New data overnight showed Japanese machine orders leaping 14% in
March from February, while China's leading economic index rose
slightly for last month.
Eurozone construction output sank 8% in March from a year
earlier.
"A spell of Dollar weakness looks like gold's only
salvation at the moment," says one wholesale dealer in a
note.
"So another disappointing data point could encourage more
short-covering [when bearish traders close their position] ahead
of the weekend."
The US Dollar crept towards a 10-month high vs. a basket of major
currencies this morning.
US consumer sentiment data were due for release Friday at 09.55
New York time.
"Bullion's price break below the psychological $1400 an ounce
level may introduce additional near-term pressure on gold," says
bullion market-maker HSBC's James Steel.
"However, physical demand is likely to pick up further given the
price drop, to help stem potential losses."
Over in India – the world's biggest gold buying nation on an
annual basis – "There is no supply," Reuters today quotes
Prithviraj Kothari, head of Mumbai importers Riddhi Siddhi
Bullions Ltd.
Thanks to this week's sudden imposition of Indian gold
import restrictions, supply is so tight some
distributors are charging up to $20 an ounce above international
benchmark London prices, Kothari says.
Hong Kong premiums have jumped this week to
record highs of $5 per ounce, with the kilogram gold bars favored
by China's investment market now "hard to come by" according to
one Singapore dealer.
Even so, "Many people are waiting on the sidelines," reckons
Singapore dealer Brian Lan at GoldSilver Central Pte, "as they
are expecting another drop" in global gold prices.
Amongst Western money managers, "We're seeing some of the pension
funds selling via the
ETFs," reckons analyst Daniel Smith at Standard Chartered bank,
"which is a bit of a worrying sign."
Exchange-traded trust funds backed by gold shed yet more metal on
Thursday, with the two leading US funds – the GLD and
IAU – dropping 7 tonnes between them to reach the lowest
combined level since April 2010 at 1,233 tonnes.
Since Dec. 2012's all-time peak, the GLD and IAU have lost 21.4%
of their combined gold ETF holdings.
"The price of silver in 2013 will primarily be determined on the
demand side," says the latest Commodities Weekly from French
investment bank and London bullion dealer Natixis, forecasting
"relatively stable" supply with a slight dip in recycling.
On the industrial side it says, and "despite promising
expectations from the rest of the world, we expect a slight drop
in [photo voltaic] installations due to weak European [solar
panel] demand" thanks both to low subsidies from government and
the continued Eurozone crisis.
Silver ETF holdings have yet to follow gold
trust funds sharply lower, Natixis notes – primarily because
private investors own the former, as opposed to money managers in
gold.
"[But] at some point these retail investors are likely to start
selling."
Total silver ETF. holdings of 19,400 tonnes currently equate to
60% of last year's total market supply, the bank's analysis adds,
and "an outflow...could introduce substantial downside risks for
silver prices."
Adrian Ash
(c) BullionVault 2012
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
May
16th
Surge in Retail Gold Demand Outweighed by ETF Selling as Far East Premiums Hit New Highs
By Adrian Ash
Global Gold prices fell further at the start of
London trade on Thursday, hitting new 1-month lows beneath $1370
per ounce but leaving gold bars traded in East Asia at
record-high premiums.
"[Western] investors appear to be tired of gold as a safe haven,"
says Mitsubishi analyst Jonathan Butler, quoted by Reuters,
because "they anticipate the end of loose monetary policies,
possibly by the end of this year or maybe early next year."
With US consumer price inflation data due just before today's
Wall Street opening, five members of the US Federal Reserve were
scheduled to make separate speeches at various events later on
Thursday.
Four of them are voting members on the Fed's policy-setting
committee.
"There also seems to be a return of risk appetite" amongst
Western money managers, says Mitsubishi's Butler.
European stock markets today held flat after rising 12% in the
last month.
The gold price in US Dollars extended Wednesday's drop to fall
briefly beneath a one-month low of $1370 per ounce – a level
first hit in October 2010.
Gold priced in Sterling fell closer to £900 per ounce, a level
seen on only 4 trading days since May 2011.
"New highs in the US equity markets and plummeting bond yields,"
says Edward Meir at INTL FC Stone, "particularly in Europe,
spurred the exodus away from gold and into financial assets on
Wednesday.
The silver price, "which has been looking
particularly poorly on the charts lately," says Meir, "is now
within striking distance of its mid-April lows of $22 an ounce" –
the lowest level since Oct. 2010.
"Rampant equity markets continue to attract investor funds away
from gold," agrees a note from Japanese trading house Mitsui's
New York team.
"The yellow metal looks to be heading for another look towards
last month’s lows beneath $1350."
In contrast to Western money managers, Chinese investors "[have
been] discouraged by the weak domestic stock market," says the
latest Gold Demand Trends from market-development group the
World Gold Council, "[and so] increasingly
relied on gold to fulfil their investment needs."
Analyzing global data from the first 3 months of this year (which
included the Chinese Lunar New Year holidays), the World Gold
Council says China's total gold demand again outpaced demand from
India – still the world's #1 in 2012 – by rising 20% from the
same period in 2012 to a new quarterly record of 294 tonnes.
Indian demand rose 27% to 256 tonnes. So-called "retail" demand
worldwide – meaning jewelry, small gold bars and
coin – rose 11.5% by weight compared to Jan-Mar. 2012,
with US gold jewelry sales rising 6%.
That was the first rise in US gold jewelry
demand year-on-year since autumn 2005.
Opposing the rise in retail gold demand, says the World Gold
Council, "[was] a well-documented decline in gold E.T.F.
holdings...which outweighed the [global] growth in bar and coin
demand."
In total, exchange-traded gold trust funds shed more than 175
tonnes during the first quarter.
The giant New York-listed SPDR Gold Trust (ticker:
GLD) has shed a further 175 tonnes in the 6 weeks since,
losing metal again on Wednesday to reach its smallest holdings
since March 2009.
New regulatory filings for March 31st yesterday showed speculator
George Soros's flagship hedge fund cut its position in the GLD by
a further 12% during the first quarter.
Paulson & Co., the largest single investor
in the GLD, maintained its position in the trust, which now holds
1047 tonnes of large gold bars in HSBC's specialist bank vault in
East London.
Meantime in Asia, "Japan is clearly back from stagnation,"
reckons Citigroup economist Naoki Iizuka in Tokyo, commenting to
Bloomberg today on new data showing a surprise 3.5% annualized
rise in GDP during the first quarter.
The Japanese stock market took a pause Thursday from hitting new
5-year highs.
Premiums for 1 kilogram gold bars in Hong Kong
and Singapore meantime rose to newly unprecedented levels above
the bullion market's benchmark London price, according to private
reports.
The excess demanded above 400-ounce London wholesale prices for
kilobars (31 ounces) of 0.9999 fineness today reached $5 per
ounce, up from last week's strong $3 level as demand held firm.
Adrian Ash
(c) BullionVault 2012
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
May
16th
Noricum Gold (NMG): Possible Wedge Breakout
By zakmir
Although I normally shy away from the smallest of penny stocks,
i.e. those below a fraction of a penny, it may be that Noricum Gold
does have enough bullish technical points to be on the radar as a
potential recovery situation, over and above the bounce seen
yesterday.
On a charting basis one would point out two plus points, the first being the falling wedge formation of the daily chart in recent months, with the implication being that as little as a break of the top of this bullish setup at 0.5p can be regarded as a buying opportunity. This idea is backed up by the way that despite the lower lows in the price window over recent weeks, we have been treated to bullish divergence in the RSI window.
The suggestion is that for aggressive traders an end of day close back above 0.5p would be a buy signal. Although cautious traders could wait on a weekly close above the 200 day moving average currently at 0.8p before taking the plunge on the long side. At least once we see a 200 day moving average break, the notional upside could be as great as a retest of early 2012 resistance at 2.5p plus on a three month timeframe.
For more of Zak's technical analysis sign up to Zaks-TA.com by clicking here
Follow Zak on twitter by clicking here
May
15th
Precious Metals Hit 3-Week Lows, ETFs Could Sell Another 250 Tonnes of Gold
By Ben Traynor (Bullion Vault)
Wholesale gold bullion prices fell to three week
lows around $1410 an ounce Wednesday, as European stock markets
ticked higher, reversing earlier losses following disappointing
Eurozone growth data.
Gold in Euros fell as low as €1094 an ounce,
while gold in Sterling fell below £930 an ounce.
"Gold spot is approaching the support [level] of $1403 [an
ounce]," say technical analysts at Societe Generale.
"There is no significant level of support between here and the
low from April 16 in the $1322 area," adds the latest technical
analysis from Scotia Mocatta.
The world's biggest gold exchange traded fund SPDR Gold
Trust (ticker: GLD) could lose up to a further four
million ounces (almost 125 tonnes) to add to the nearly 300
tonnes it has lost through redemptions since the start of the
year, according to analysts at Deutsche Bank.
"We expect that the bulk of the drawdown comes from institutional
investors rather than retail investors," says a report from
Deutsche.
"If in fact only institutional selling is occurring in the gold
E.T.F. then we expect that nearly two-thirds of the selling that
is likely has probably already passed. As SPDR is roughly half of
total physically backed E.T.F.s, this could imply a further 4 to
8 million ounces [approx. 125 to 250 tonnes] selling [from all
gold E.T.F.s] if macro fundamentals continue to move against
gold."
"In the short term, gold prices remain caught between the recent
slowdown in US activity and the significant decline in ETF
holdings," adds a note from Goldman Sachs, whose analysts have a
12-month gold forecast of $1390 an ounce.
"While the sell-off in gold prices has been faster than we
expected, with prices below our near-term forecasts, further
unwind of ETF positions would likely continue to precipitate this
decline...going forward, we expect that gold prices will continue
to decline should our economists' forecast for a reacceleration
in US growth later this year prove correct."
"Gold is likely to remain sensitive to potential dialog regarding
the Fed's QE intentions," adds a note from HSBC, referring to the
US Federal Reserve's ongoing $85 billion a month quantitative
easing policy.
"Further comments by Fed members for scaling back QE would be
negative for bullion prices."
Silver meantime fell to around $23 an ounce this
morning, like gold hitting a three-week low, as other commodities
also dipped and US Treasury bonds gained.
On the currency markets, the Euro fell to a six-week low against
the Dollar Wednesday, while the Yen touched a fresh
four-and-a-half year low, as Japan's Nikkei 225 index breached
15,000 for the first time in over five years.
Over in Europe, France fell back into recession in the first
quarter, according to provisional GDP data published Wednesday
that show a second successive quarter of negative growth. German
Q1 growth meantime was 0.1%, provisional figures show, less than
the consensus forecast among analysts. GDP for the Eurozone as a
whole contracted 0.2% in Q1, data published this morning show, to
make a 1% year-on-year drop in economic output.
Ratings agency Fitch meantime upgraded its credit rating for
Greece Tuesday, citing progress on cutting the government budget
deficit, although Fitch still rates Greek government bonds as
junk with a rating of B-.
The latest Bank of England Quarterly Inflation
report, published this morning, shows a "welcome change
in the economic outlook", according to outgoing governor Mervyn
King.
"Today's projections are for growth to be a little stronger and
inflation a little weaker than we expected three months ago,"
King told reporters this morning.
"That is the first time I have been able to say that since before
the financial crisis." King added however that "the challenges
facing central bankers are as great as they have ever been".
Ben Traynor
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
May
14th
Stronger Dollar Means Gold Has Lost Safe Haven Appeal, Sentiment Turns Positive in India
By Ben Traynor (Bullion Vault)
Spot Gold fell towards three-week lows Tuesday,
dropping as low as $1423 per ounce, as the Euro also fell against
the Dollar after comments from those attending today's Eurozone
finance ministers' meeting appeared to show disagreement over the
creation of a banking union.
Days after Germany's DAX index set a new record high, European
stock markets extended yesterday's losses this morning.
"Due to US Dollar strength and record levels in European shares,
gold has been losing its 'safe haven' appeal in recent days,"
says a note from German-based refinery group Heraeus.
Gold in Euros meantime dipped briefly below
€1100 an ounce, while gold in Sterling fell below £935 an ounce.
Silver meantime fell to the lower end of its
range for the past three weeks, dropping below $23.50 an ounce,
as other commodities also dipped lower.
US Treasuries gained while German Bund prices fell.
The Eurogroup of single currency finance ministers were expected
to discuss the creation of a banking union – which would include
deposit guarantees and supranational supervision of financial
institutions – as part of their meeting today in Brussels.
"We want a single European resolution regime," European Central
Bank executive board member Joerg Asmussen said, "together with a
single resolution agency and a single resolution fund that is
financed by a levy from the banking industry. This should come
into place in parallel with the single supervisory mechanism
hopefully by the summer of next year."
Shortly after Asmussen's comments were reported the Euro gave up
today's gains against the Dollar, dropping back below
$1.30.
In contrast with Asmussen's comments, German finance minister
Wolfgang Schaeuble told reporters a day earlier that existing
European treaties "don't give enough foundation for a European
[banking] restructuring authority".
"You can do the same thing very well with a network of national
authorities," Schaeuble added.
"We should go as far as possible within the current treaties,"
countered French finance minister Pierre Moscovici, "and then
think about what could require a change in treaty. Our belief is
that we can go very far."
"The Germans are putting forward understandable questions which
will have to be dealt with," added Eurogroup president and Dutch
finance minister Jeroen Dijsselbloem.
"But I don't see why that would stop us making progress on the
banking union."
Ireland meantime may seek to use the ECB's Outright Monetary
Transactions program – whereby the ECB pledges to buy government
bonds on the secondary market to prevent a sharp rise in
borrowing costs – as it exits its bailout, the country's finance
minister said Monday.
"We haven't decided in government yet whether we will apply or
not," said Michael Noonan, "but it is something that seems to be
a mechanism that is working very well."
The supply of scrap gold sent to refineries is
expected to drop 4% this year compared to 2012, according TD
Securities. The Toronto-based brokerage says around 1550 tonnes
of scrap gold will be recycled during 2013, the lowest total
since 2008, Bloomberg reports.
Last month saw gold's biggest two-day drop in three decades.
"A lot of people were shocked," says Arthur Abramov, owner of
cash-for-gold business Manhattan Buyers Inc., which saw its
monthly volume of gold recycled fall by 40% to 300 ounces.
Over in India, yesterday's Akshaya Tritiya
festival, viewed as an auspicious day to buy gold, saw
an increase in gold jewelry sales compared to
last year, according to local press reports.
"Sentiment of gold buying has turned positive," says Haresh Soni,
chairman of the All India Gems & Jewellery Trade Federation,
adding that he expects gold sales for yesterday to show a 20-25%
increase on last year's festival.
Ben Traynor
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.
May
14th
Petropavlovsk (POG): Still Tarnished
By zakmirIt has to be said that looking on the bright side of Petropavlovsk in terms of the price action in the near future would certainly be a tempting thing to do after such large losses as we have seen. But the problem would still appear to be that as far as miners in general and gold stocks in particular, the bulls have been hamstrung by last month's collapse for precious metals. As things stand, while there may be huffing and puffing, there is no real sign of a bargain-hunting bounce for gold for stocks that are reliant on it heading north in a significant way.
This means as far as Petropavlovsk shares are concerned, we are obliged to go with the recent downtrend especially while there is no end of day close back above this month’s £1.54 intraday peak. While this remains the cap on the price action there is the risk of a decline to the floor of a March descending price channel under £1.20 over the next 4 to 6 weeks.
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