Gold Gains As Dollar Eases On EU Market Rebound
The Wall Street Journal
Gold futures edged higher on Tuesday, as calm in European markets weighed on the U.S. dollar and drew buyers to the precious metals, but trading was thin ahead of this week's monetary policy announcement from the Federal Reserve.
The most actively traded contract, for June delivery, rose $11.20, or 0.7%, to settle at $1,643.80 a troy ounce on the Comex division of the New York Mercantile Exchange.
European markets were calm on Tuesday after being rattled Monday by a series of warning signs on the euro-zone's political and financial stability. But relatively well received auctions of Dutch, Spanish and Italian debt helped steady investor sentiment on Tuesday, drawing buyers to growth-sensitive assets and weighing on the U.S. dollar.
Gold tends to benefit from dollar weakness, as it makes the precious metal appear cheaper for buyers using other currencies.
Other investors were cautious about placing large bets in the gold market ahead of Wednesday's policy statement expected from the U.S. Federal Reserve. Gold tends to benefit from the type of accommodative monetary policies deployed by the central bank to support growth, and hints that more on the horizon could spur a rally in the metal.
"If they give any hints or indication that they might do something, I think you'll see gold and silver continue on an upward path," said Bob Haberkorn, senior commodities broker with RJO Futures. "If you don't have any mention, you'll have a letdown," he said, potentially setting prices up for more losses.
Diminished expectations for more Fed action anytime soon were key in pushing gold prices down from this year's highs just below $1,800 a troy ounce.
Mexico, Russia, Turkey, Kazakhstan and Ukraine reported a rise in their gold holdings in March, according to data released on Tuesday by the International Monetary Fund, as emerging-markets central banks continue to boost their holdings of the precious metal.
Mexico's central bank purchased 541,000 ounces during the month. Russia added 532,000 ounces in March, and Turkey bought 369,000 ounces. Kazakhstan's reserves rose by 138,000 ounces.
World central banks through much of the 1990s and 2000s were sellers of the precious metal, but that trend flipped in recent years as some central banks bought gold to keep the metal's share of their ballooning foreign exchange holdings steady. Others bought in an effort to diversify holdings of the world's major reserve currencies.
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Utah Makes It Easier To Pay In Gold And Silver
Huffington Post
Utah is making it easier for people to pay for things with gold and silver.
Gary Herbert, Utah's Republican governor, signed into law in late March a bill that will make it easier to pay taxes and do businessin gold and silver, according to Herbert's website and the Salt Lake Tribune. Utah's House passed the bill by a 60-8 margin, according to the Salt Lake Tribune.
Retailers still will not be forced to accept gold and silver, according to the bill. Instead, Utah made it acceptable to use it as an alternative currency for willing buyers and sellers. As a result, many gold bugs may find it hard to use gold and silver on a daily basis.
"This is just designed to be an alternative currency," said Utah Rep. Brad Galvez, who sponsored the bill, in March, according to the Salt Lake Tribune. "It is not designed to replace the Federal Reserve by any means."
Utah's House also passed a bill in March that would have made it even easier to do commerce in gold and silver, by a 50-23 margin. Herbert does not appear to have signed the bill, since his website and the Salt Lake Tribune have not reported it.
Utah has been moving toward using gold and silver as a currency for more than a year. Herbert signed a bill into law in March of 2011 that made government-issued gold and silver coins legal tender for transactions and eliminated state capital gains taxes on their exchange, according to CNN Money. In doing so, it became the first state in the country to recognize gold and silver as a currency, according to the Associated Press.
Thirteen states -- including Colorado, Minnesota, North Carolina, and Tennessee -- are considering making gold and silver legal tender, according to the Salt Lake Tribune and CNN Money. Former Georgia state Rep. Bobby Franklin introduced the "Constitutional Tender Act" in 2010, which would have required Georgians to pay their state taxes in gold and silver.
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Buy on the Lows as Silver Prices Will Rally in 2012
Money Morning
Silver prices Friday headed for a gain of 0.9% this week, its biggest weekly gain in nearly two months as the metal has taken a dip this year.
But silver prices are set to rally in the second of half of 2012, according to a report from the global head of metals analytics at Thomas Reuters GFMS.
Philip Klapwijk of GFMS says silver sales for industrial application as well as for jewelry, silver, silverware and photography will rise as end-users restock inventories that diminished in late 2011. Fabrication demand makes up 80% of total demand for the metal, and should be up about 3% to 5% this year to roughly 900 million ounces in 2012.
Klapwijk told Dow Jones Newswire, "We see a range for silver north of $40 and maybe getting to a low of $28" per troy ounce.
GFMS's independently researched and assembled World Silver Survey 2012, released Thursday, stated silver prices will pick up into the end of the year. Factors boosting investors' desire for silver will help drive the price.
"We see a continuation of very loose monetary policy," Klapwijk said. "We also see rates likely being cut in some of the emerging-market economies such as China, India and Brazil."
This means current silver market lulls are great buying opportunities since the long-term silver prices outlook remains bullish.
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Precious Metals To Edge Higher On US Economic Data
Forex Pros
Spot gold prices erased most of its earlier losses and ended slightly lower on Tuesday. Revival in the global markets due to favorable economic data from the eurozone and weakness in the US Dollar Index supported upside in the yellow metal prices.
Additionally, positive forecast for global economic growth from the IMF also helped gold to trim most of its losses in the evening session. The yellow metal touched an intra-day low of $1634.44/oz and closed at $1649.29/oz yesterday.
On the MCX, Gold June contract dropped around 0.3 percent due to appreciation in Rupee on Tuesday, touching an intra-day low of Rs.28,351/10 gms and closed its trading session at Rs. 28,482/10 gms yesterday.
Silver
Silver traded higher by 0.7 percent on the international markets on Tuesday, on the back of weakness in the US Dollar Index coupled with upbeat sentiments in the markets.
The white metal touched an intra-day high of $ 31.88/oz and closed at $31.68/oz yesterday. On the MCX, Silver May contract gained around 0.2 percent and touched an intra-day high of Rs56,291/kg.
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The Big Rally in Gold is Getting Closer and Closer
GoldSeek
The Hindu festival of Akshaya Tritivai is coming up this month and this is of interest for gold investors. The holiday, which falls on April 24th, is a day when Indians go on a major gold buying binge. It is one of the most auspicious occasions to buy gold, the ultimate symbol of wealth and prosperity. The timing couldn’t be better for the ending last week of the 20-day strike by India’s jewelers and gold importers who protested new government taxes on bullion. Moreover, the wedding season has already started in some parts of India and gold is an integral part of most Indian weddings. It is expected that in April and May imports will be around a 100 metric tons to India, the world’s largest consumer of gold. The nationwide strike is estimated to have cost the industry at least $3.91 billion.
According to an annual report released Wednesday by metals consultancy GFMS, gold’s speculative investors may have been shaken by gold’s volatile ride last year, but the physical market—particularly in China—remained faithful to bullion and the trend is expected to continue in 2012.
Gold bar demand and hoarding from China alone rose 40% in year- on-year in 2011 to a new record of 250 tons, according to GFMS. And this trend is likely to continue.
Demand for physical gold in the form of coins and bars grew in 2011, while Chinese appetite for gold jewelry expanded to record levels. This contrasted with a 10% drop in overall world gold investment by tonnage, amid heavy redemptions in the over-the-counter and gold futures markets as investors cashed in their gold positions amid heavy losses in other financial markets.
While investment demand dipped, 2011 was a “bumper year for physical investment,” according to a GFMS metals analyst. “Gold was clearly dependent on emerging markets’ economic strength as China’s jewelry demand grew to a record level, while India’s fell by less than 3%.”
Physical gold bar investment surged 37% last year to a new record of 1,209 tons, according to GFMS. This was driven by strong demand for physical gold as a store of value in China and India as well as “safe haven” interest from western investors, the report said.
Global gold coin fabrication rose 15.2% to 245.5, spurred mainly by strong demand in Turkey and China, said GFMS. Rising concern over inflation and the rapid hike in disposable incomes in places like China is also driving demand for physical gold, said GFMS.
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Gold May Advance as Euro-Area’s Debt Crisis Spurs Demand
Bloomberg
Gold futures advanced from a one- week low as the dollar declined, increasing demand for the metal as an alternative investment.
The greenback fell for the second straight day against a basket of currencies as European debt concerns eased and the International Monetary Fund increased its forecasts for economic growth. The Standard & Poor’s GSCI Spot Index of 24 commodities rose as much as 0.9 percent.
“The dollar’s weakness is supporting all commodities, including gold,” Sterling Smith, a market analyst at Country Hedging inSt. Paul, Minnesota, said in a telephone interview.
Gold futures for June delivery rose 0.1 percent to settle at $1,651.10 an ounce at 2:11 p.m. on the Comex in New York. Earlier, the price dropped to $1,635.20, the lowest since April 10. The precious metal has advanced 5.4 percent this year.
Silver futures for May delivery jumped 1 percent to $31.674 an ounce on the Comex. Prices have climbed 13 percent this year.
On the New York Mercantile Exchange, platinum futures for July delivery climbed 0.6 percent to $1,584.70 an ounce. Palladium futures for June delivery increased 1.7 percent to $661.95 an ounce.
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Gold Ends Modestly Higher After Two-Day Loss
MarketWatch
Gold futures ended higher on Tuesday, capping a choppy trading day and breaking a two-session losing run as U.S. oil and equities traded higher and as concerns about the euro zone faded.
Gold for June delivery advanced $1.40, or 0.1%, to $1,651.10 an ounce on the Comex division of the New York Mercantile Exchange. Prices lost some steam as floor-trading settlement approached.
Other metals ended higher as well, with palladium leading the way, up 1.7%.
Gold had shaken off a weak start of floor trading, but struggled to make some real headway despite the rallies for stocks and gains above 1% for oil futures.
“Gold is kind of piggybacking on the overall market,” albeit much more mutedly, according to Adam Klopfenstein, a market strategist at Archer Financial in Chicago. Traders are particularly keen on watching upcoming earnings and any news about the euro zone, he said.
The yellow metal closed at its lowest level in a week on Monday after investors sought out the U.S. dollar as a haven against euro-zone debt concerns.
Gold searched for direction as investors weighed the news from Europe, but sensed that concerns remained.
A successful bond auction in Spain and data showing German investor confidence rising for the fifth month in a row added to hopes the euro zone is on the mend.
Investors will keep their eyes trained on Europe, however, with “growing fears Spain may take advantage of the bailout fund” and the first round of French presidential elections this weekend, analysts at Commerzbank wrote in a note to clients. “In the medium to long term, gold should be able to assert its status as a store of value and recommence its upswing.”
U.S. stocks traded near session highs, with tech stocks powering gains. The rising tide lifted gold and oil futures, as well as other commodities. The rally centered around the improved demand at the Spanish bond auction.
Also Tuesday, U.S. investors parsed out data on U.S. housing starts, showing the start of home construction at a slower pace in March, but promising numbers of construction permits. Another report showed U.S. industrial production unchanged.
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Experts Forecast Jump in Gold Prices
NuWire Investor
Economic volatility stemming from two financial crises that caused global shockwaves helped to drive record gold prices in 2011, but now many factors cooling the commodity’s growth. Economists are forecasting a stronger U.S. dollar bolstered by a stabilizing economy, which always forces gold prices down, while a drop in Indian demand has also dented prices. Investment experts believe that the slide is only temporary, however, and that now is a good chance to pick up gold before it reaches a projected $2,000 an ounce. Despite the downward pressure, some believe that spiking oil prices, Federal stimulus measures and uncertainty in the Eurozone will help drive gold gains in 2012. For more on this, read the following article from Money Morning.
Gold prices this week picked up again but are still far from last year's record $1,920.30 an ounce, reached in September.
The most-active June contract settled on the Comex Friday at $1,660.20 an ounce, for a gain of 1.8%, or $30.10, since the April 5 market close.
Given the economic volatility in 2011, last year was a banner year for gold prices. Fears of global market turmoil helped push the yellow metal to record highs.
While the long-term bullish outlook for gold remains, short-term pressures have halted its steady climb.
"Gold has found more support recently, but it doesn't have all of the catalysts in place to be driven substantially higher yet," Suki Cooper, an analyst at Barclays Capital, told Reuters.
Here's why this dip isn't the start of a bearish gold year, but a chance to stock up before gold prices thrive and head to $2,000 an ounce.
The Fed, India, and Gold Prices
On April 4, the U.S. Federal Reserve released the minutes from its March 13 meeting that focused on predictions for a stabilizing U.S. economy and low inflation. The Fed's forecast cooled talk of more monetary stimulus, and sent gold prices down about 2% last week.
The Fed expects U.S. economic growth to progress at a steady pace throughout the quarter. With moderate expansion rather than rapid growth or deflation, there's no need to curb borrowing, and interest rates will stay near zero.
This bodes well for the U.S. dollar, which usually puts downward pressure on gold.
It's no secret that a weakened dollar sends investors running to the real value of hard commodities. A stronger dollar does the inverse: it causes the big investors to be less cautious with regard to investments in liquid capital, creating a dip in gold prices.
Lagging Indian imports also have contributed to lower gold prices at the beginning of this quarter.
India is the world's leading consumer of gold. Last year alone, according to the World Gold Council, gold imports rose in that nation 1.1% to a record high of 969 tons. But this year imports have fallen, down 55% in the first quarter.
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Gold at 2,000 Dollars by Year-End?
FX Street
Financial markets including commodities spent most of the week recovering from the surprise weakness witnessed in the recent US jobs report. US stocks dropped to a one-month low and in Europe the dramatic divergence between different countries continued. The divergence in the performance so far this year between the DAX index in Germany and the IBEX index in Spain is really stunning and currently stands at 27 percent. Spain especially is now the focus in the prolonged European debt crisis with the yield on its 10-year government bonds reaching 6 percent, more than four percentage points higher than its German equivalent.
Meanwhile, the dollar continues on its road to nowhere with the EURUSD, the world’s most traded currency pair, once again finding support ahead of the important 1.3000 support level. The euro buying – dollar selling that followed once the support level was confirmed generally helped commodities to recover some of their poise late in the week.
However, the near-term outlook for global growth, especially in China where Q1 growth eased to a three-year low, points towards some softness and could limit the upside potential for commodities during this quarter. The China news triggered some selling of industrial metals, especially copper which at one point came close to critical support levels before bouncing as the dollar weakened.
Gold did receive a boost after support held once again and from a forecast that 2,000 dollars could be seen before 2013 while oil prices spent most of the week testing the strength of support.
Gold looks towards the FED – again
Traders in the gold market have been wrong-footed on several occasions during the last couple of months as the main price mover has been the constant on/off talk about further US quantitative easing. The recent weakness in US job growth has once again turned the focus towards the potential for more liquidity being provided. Support was also provided by GFMS, one of the world’s leading consultancies in precious metals. In its Gold Survey 2012 it forecast that gold could move above $2,000 by year-end or early 2013 before peaking some time during 2013.
The reasons behind the continued rally are well known, such as: concerns over the Eurozone debt crisis, negative real yields and the prospect of more US monetary easing. The peak in 2013 and subsequent retracement will occur once the prospect for higher US rates becomes a reality. GFMS also interestingly sees supply from mining and scrap continuing to rise faster than demand for jewellery and other goods leaving the investment community in charge of driving demand forward. It sees a point in time where not enough investors will step up and that could signal the turn in the market. The near-term floor in the market is called at 1,530 but will only be met during a risk-off scenario where gold also could get dragged lower for a while.
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Gold at Week High on Housing Data, Weaker Dollar
MarketWatch
Gold futures advanced Tuesday, erasing some of their recent losses as concerns about the euro zone eased, weak housing data added more pressure to the dollar, and most other commodities traded higher.
Gold for June delivery added $11.20, or 0.7%, to settle at $1,643.80 an ounce on the Comex division of the New York Mercantile Exchange. That was the highest for a most-active gold contract in a week.
That comes on the heels of a loss of 0.6% on Monday and a weekly decline of 1%.
The metal garnered support from a weakened dollar following news U.S. home prices dropped sharply in February, hitting the worst level in nearly a decade.
A lower dollar is a plus for gold and other dollar-denominated commodities as it makes them cheaper for holders of other currencies.
The day’s macroeconomic reports “showed an incredibly weak housing market,” hitting the dollar and benefiting gold, said James Cordier, a portfolio manager with Optionsellers.com in Florida.
It also served to stoke hopes of some economic stimulus could be forthcoming, he said.
Also Tuesday, Commerce Department data showed sales of new U.S. homes falling 7.1% in March, though the drop was due to a revision higher for February.
A gauge of consumer confidence declined for a second month. The Conference Board reported its index at 69.2 in April, down from a revised reading of 69.5 in March.
The dollar index, which compares the U.S. unit to a basket of six currencies, recently traded at 79.217, from 79.406 in late North American trading Monday.
Despite the day’s gains for gold and most commodities, there was still plenty to keep investors worried. India’s jewelry demand and interest in physical gold in one of the world’s top buyers “is very slack in spite of the (Hindu festival) Akshaya Tritiya festival this week, which is a concern,” analysts at VTB Capital in London said in a note to clients.
“We still expect volatility to gain ahead of Wednesday’s (Federal Open Market Committee) April meeting, with market participants seeking further insight into the Fed’s monetary policy outlook which will ultimately influence rate expectations and the dollar trade,” they added.
The Federal Reserve is scheduled to make its rate announcement on Wednesday, followed by a news conference by Fed Chairman Ben Bernanke.
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