Gold Prices Climb With Euro on Hopes for Greek Deal
Economic Times
Gold prices rose more than half a percent on Monday as growing optimism that European leaders will sign off on a rescue deal for Greece lifted the euro, and after China's central bank further loosened monetary policy.
Spot gold was up 0.6 percent at $1,734.19 an ounce at 1210 GMT, while U.S. gold futures for February delivery were up $10.10 an ounce at $1,736.00.
Gold prices are up nearly 11 percent this year, benefiting from a rebound in the euro and expectations that U.S. monetary policy will remain loose, cutting the opportunity cost of holding non-yielding bullion. But analysts say the appeal of other investments could keep gold prices rangebound this year.
"The risks (in Europe) could dissipate modestly in the near term. Certainly, in China, there is a growing acceptance that the government will step in to support growth, and things look like they're stronger than expected in the United States," said Deutsche Bank analyst Daniel Brebner
"Globally, it looks like risk assets are being accumulated by investors, and in that kind of environment, gold should perform reasonably well," he added. "But I would argue it could underperform some of the other metals, the base metals and the white precious metals."
The euro rose 0.5 percent on Monday after China eased monetary policy to stimulate growth and expectations mounted that euro zone policymakers were set to approve Greece's long-awaited second bailout, averting a messy default.
Euro zone finance ministers are expected to approve a second deal for Greece when they meet at 1600 GMT, a move they hope will draw a line under months of turmoil that has shaken the currency bloc.
"The market's attention is to remain fixated on developments in the euro zone as finance ministers gather in Brussels to finalise the details of the second bailout for Greece," said VTB Capital in a note. "We see subdued action today as a positive decision on Greece is pretty much priced in."
Other assets seen as higher risk rallied along with the euro, with European equities reaching their highest in nearly seven months and oil prices up more than $1 a barrel. Safe-haven German government bonds slipped.
MONEY MANAGERS CUT GOLD LENGTH
Money managers in gold futures and options reduced their net long position by about 6 percent in the week of Feb. 14, their first decline in weeks, latest data from the U.S. Commodity Futures Trading Commission showed on Friday.
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China Buying Gold Like Cheap Cabbage, COMEX Gold Speculator Positions Surge
Commodity Online
The spot market price of buying Gold climbed to $1728 an ounce Monday morning London time – a slight drop from last week's close – while stock markets, commodities and the Euro all fell and government bond prices rose as European leaders met for their latest summit in Brussels.
The cost of buying Silver fell to $33.08 at one point – a 2.6% drop from where it ended last week.
Gold fell as low as $1718 per ounce Monday morning, dropping steadily during Asian trading, though this represented a loss of only 1% on Friday's closing price.
CHINA
"Everybody seemed to be expecting profit taking out of Shanghai after the two Chinese bourses came back online," said one Hong Kong dealer.
"As far as we can see, there wasn't much of that."
During last week's Lunar New Year holiday, China saw a "gold rush", with consumers spending more on buying gold than during the 2011 festival, according to a China Daily report.
"People seem crazy about gold, snatching it up more like a cheap cabbage than such a precious metal," it quotes Beijing resident Miao Miao.
The value of sales at two of Beijing's top gold retailers, Caibai and Guohua, reportedly hit 600 million Yuan ($95.28 million) – a 49.7% rise on last year's sales, almost 50% increase in purchases!The gold price in Dollars meantime rose around 25% over the same period.
The Yuan also appreciated against the Dollar over that time, gaining around 3.6%, which implies a rise in Chinese domestic gold prices of around 20%.
EUROPE
Despite strike action in Belgium that has brought transport to a halt, European leaders met in Brussels on Monday, where the issues of budget discipline and the Greek debt crisis were expected to dominate discussions.
"Solidarity and reliability are really coming together in this context," German finance minister Wolfgang Schaeuble said last week.
"We are credibly addressing the problems in the affected countries...and in the meantime we have to demonstrate solidarity."
Britain however has already walked away from the new budget treaty currently being drafted.
"To write into law a Germanic view of how one should run an economy and that essentially makes Keynesianism illegal is not something we would do," one British official told newswire Reuters.
Denmark, which does not use the Euro, has negotiated a concession that fines imposed on a country that breaches new deficit rules would only go into the Eurozone bailout fund if the fined country were a Eurozone member – otherwise they will go to the European Union's general budget.
Greece meantime has rejected a German proposal that an EU budget commissioner should have power over Greek taxes and spending.
"I think it's wrong that money from the EU's structural development fund is being spent on bicycle stands," German foreign minister Guido Westerwelle said on Friday, arguing that EU funds are being squandered.
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Gold Up on Safe-Haven Buying, Dollar Weakness
MarketWatch
Gold futures inched higher Friday, leaving behind early-session losses as a lower dollar and safe-haven buying ahead of the weekend supported prices.
The early price weakness was met with buying interest that quickly pushed prices higher, a good sign for gold’s short-term gain prospects, analysts said.
Gold for February delivery rose $6, or 0.4%, to $1,732.70 an ounce on the Comex division of the New York Mercantile Exchange after tapping a low of $1,714.20 earlier.
A close in the black would be gold’s third straight session of gains.
Gold surged more than 3.6% in the past two days, and on Thursday settled at its highest in seven weeks.
The metal has enjoyed strong recent gains spurred by the Federal Reserve’s projection of ultra-low interest rates through 2014.
Gold prices have risen nearly 10% so far this month.
“Gold looks great in the charts and a lot of people are taking it as a sign to buy gold,” said Adam Klopfenstein, a market strategist with Archer Financial Services in Chicago.
Ahead of the weekend and potential for headlines out of Greece and the euro zone, some are also adding gold to their portfolio as a safe haven, he added. A lower dollar also helped push prices higher, Klopfenstein said.
The Wednesday Fed decision “awakened the positive gold sentiment” that had been underneath the surface but cloaked in caution after the selloff in fourth quarter, said Jeffrey Wright, a senior research analyst with Global Hunter Securities.
“Inflation is in the market; (it is ) just being under-reported in my opinion,” he said. In addition, the “miss” on fourth-quarter gross domestic product will give the Fed an “additional cover” to continue its “easing” stance and will also contribute to gold going higher, he added in emailed comments.
Earlier Friday, investors parsed out news U.S. GDP expanded 2.8% in the fourth quarter, compared to expectations of a rise around 3%.
Other metals more linked to industrial uses, and therefore more sensitive to the GDP news, felt the pressure on Friday, but silver turned higher.
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Gold Surges 2 Percent, Above $1,700 After Fed Statement
Reuters
Gold rallied 2 percent on Wednesday, rising above $1,700 an ounce for the first time since mid-December after the U.S. Federal Reserve said it will likely not raise rates for longer than previously expected due to a sluggish economic recovery.
Bullion sharply outperformed equities and industrial commodities after the Fed said it was unlikely to raise interest rates until at least late 2014. The central bank repeated its view that the U.S. economy faces "significant downside risks."
"From an equity standpoint, it's not a good story as the Fed was anticipating a much slower rate of growth than the market was," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
"Gold was reacting to the Fed's guidance of historically low rates all the way until 2014, which suggests that there will be plenty of investment money around for an extended period of time," he said.
Gold also received a boost after the central bank appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers' goals.
Spot gold was up 2.2 percent at $1,702.80 an ounce by 1:39 p.m. EST, after rising to a session peak of $1,703.71, the highest since December 12.
U.S. February gold futures were up $36.80 at $1,702.80 an ounce in decent trading volume.
Gold is now up 9 percent for the year, after the metal briefly entered a bear market and fell 10 percent in December as the metal had appeared to lose its safe-haven status.
Silver rose 3.4 percent on the day to $33.09 an ounce.
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Gold Rises for Fourth Day – IMF $500 Billion Hopes Create Concerns
Seeking Alpha
Gold’s London AM fix this morning was USD 1,664.00, GBP 1,076.53, and EUR 1,289.62 per ounce.
Yesterday's AM fix was USD 1,657.00, GBP 1,077.09, and EUR 1,290.80 per ounce.
Cross Currency Table - Bloomberg
Spot gold rose on Thursday in Asia and has consolidated on those gains on somewhat subdued trading conditions.
There are hopes that new flows of funding from the International Monetary Fund will help contain the euro zone debt crisis. However, some investors are concerned that the funding is another form of short term debt based panacea and a further currency debasement.
IMF officials from twenty nations are set to hammer out a plan at a meeting in Mexico on Thursday and Friday. Another multibillion or even trillion dollar monetary injection into the global financial system may further boost demand for bullion.
XAU-GBP Exchange Rate - Bloomberg
The duty hike in India has decreased gold prices by 1% in Mumbai as the rupee gained 0.5% against the dollar.
Some jewellers think the recent duty may slow down demand and may result in a decrease in imports from the official channels of about thirty banks. The increased tax may also lead to a tertiary market where people trade amongst themselves and not through dealers.
Traders still do not see the hike dampening the demand for the yellow metal. India is the world’s largest importer of gold and its households have the largest holdings of the metal, according to data from the World Gold Council, although Chinese households appear to be catching up in their purchases of gold.
Global Gold Demand by World Gold Council - Reuters
In both China and India, gold is popular for cultural, historical and financial reasons.
Gold is seen as a safe haven that will preserve a family’s wealth over generations. There is more trust in gold bullion than paper assets such bank deposits, stocks and bonds as they have protected Chinese, Indian and people throughout the world from periods of deflation (banks and governments can go bust) stagflation (paper money and bonds lose value), and hyperinflation (paper money and bonds really lose value).
While western countries have not experienced the ravages of high inflation, many African (Zimbabwe recently), Middle Eastern (Iran today) and Asian (Thailand, Vietnam, Indonesia, India and many others) economies have.
It continues to be imprudent to ignore the real risk of today’s inflationary monetary policies by western central banks.
With currency debasement continuing globally, gold remains an essential asset to own.
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Gold Rises for 3rd Day on Euro, Equities Gains
Reuters
Gold rose on Wednesday on gains in the euro and U.S. equities and optimism that the International Monetary Fund will raise additional funds to help combat Europe's debt crisis.
Bullion was on track for a third consecutive day of gains in decent trading volume after U.S. investment bank Goldman Sachs Group Inc's (GS.N)earnings beat estimates and increased investor appetite for risk. .N
But traders were cautious after gold lost 10 percent in December and a respected precious metals consultant warned the metal's decade-long bull run may be near an end.
"If the European situation doesn't get resolved, which has been priced into the market, we could be right back to asset-allocation type selling in a fairly short order," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
McGhee said that gold could also sell off if China does not implement any kind of stimulus, as move that has been broadly anticipated by the markets.
Spot gold was up 0.6 percent at $1,660.50 an ounce by 12:50 p.m. EST.
The metal rose on Tuesday after weak growth suggested that China may try to boost productivity through monetary easing.
U.S. gold futures for February delivery gained $5.50 an ounce to $1,661.10.
COMEX gold options floor trader Jonathan Jossen said that the order flow was "very bullish," with good-size trades of call options at higher strike prices.
Gold fell earlier in the session. Traders cited a bearish industry report on Tuesday by metals consultancy GFMS that the metal is nearing the end of a decade-long run as the macroeconomic backdrop changes and investment in gold fades.
Silver rose 1.6 percent to $30.53 an ounce.
Silver prices fell sharply last year after hitting a record near $50 an ounce in May, and underperformed gold in the full year as they fell 10 percent against gold's 10 percent rise. Silver's ratio to gold is currently at around 55, up from 32 in April.
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Gold Up for Third Day, Hits 1-Month High on Euro Gain
Reuters
Gold rose to a one-month high on Thursday, as comments by the president of the European Central Bank on cheap money stabilizing the region's banking system extended the metal's gain to a third consecutive day.
Bullion largely followed a rally in the euro after ECB President Mario Draghi said the bank's flood of cheap three-year loans was helping banks across the euro zone but left the door open to further interest rates cuts.
Despite Thursday's market moves, a positive correlation among gold, the euro and riskier assets has shown signs of breaking in January. In the previous two months, gold had traded in virtual lockstep with the euro.
Gold has gained around 6 percent in 2012.
"Right now, gold is operating on its own merit as a store of value," said Zachary Oxman, managing director of futures brokerage TrendMax.
"The problems in the euro zone are still there, and I believe the debt issues in Greece and Italy are not going to be alleviated at all," Oxman said.
Spot gold was up 0.4 percent at $1,646.54 an ounce by 1:22 p.m. EST, having touched a one-month high at $1,661.71.
U.S. gold futures for February delivery traded up $8.50 an ounce at $1,648.10 in decent volume.
Draghi said the ECB's bond-buying process had only just begun to achieve its aim. The euro hit session highs after his comments, boosting gold, which tends to gain as the dollar weakens.
Concerns that the euro zone economy remains mired in its debt crisis while the U.S. economy is improving have pressured the euro this year and consequently lifted euro-priced gold.
In January, gold priced in euro terms has outperformed dollar-priced gold due to a 1 percent drop in the euro versus the dollar so far this month.
SILVER EAGLE SALES UP
Demand for silver coins has been strong at the start of the year, with the U.S. Mint reporting American Eagle silver coin sales of 4.257 million ounces in January so far, already a higher volume than recorded in any of the previous three months.
U.S. Mint gold coin sales have also been healthy at 82,500 ounces so far this month, 26 percent higher than in the entire month of December.
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Gold Rises as ECB Comments Lift Euro
Yahoo News
Gold climbed towards $1,660 an ounce on Thursday after European Central Bank president Mario Draghi said the supply of cheap money released by the bank was helping stabilise the banking system and lift the euro zone economy, boosting the euro.
Spot gold was up 1 percent at $1,658.19 an ounce at 1444 GMT, having earlier touched a one-month high at $1,659.66. U.S. gold futures for February delivery were up $19.70 an ounce at $1,659.20.
Draghi said after the bank opted to hold interest rates steady that the ECB's flood of three-year money is helping the euro zone banking system substantially and supporting confidence in economic growth.
The bank's bond-buying process has only just begun to achieve its aim, he said. The euro rose to session highs after his comments, boosting gold, which tends to rise as the dollar weakens.
"There has been a fairly pronounced pullback (in the dollar) following weaker U.S. macro numbers and Draghi's comments," said VTB Capital analyst Andrey Kryuchenkov. He said a breach of $1,660 on gold could see prices swiftly return to $1,680.
Although it is currently rising, concerns that the euro zone economy remains mired in its debt crisis while the U.S. economy is improving has pressured the euro this year and consequently lifted euro-priced gold.
The euro is down 1.2 percent versus the dollar in January. Gold in euro terms has outperformed the spot metal this year, rising 7.4 percent against dollar gold's 6.0 percent.
The euro earlier rose against the dollar after an encouraging Spanish bond auction, which saw nearly 10 billion euros' worth of bonds sold against a target of 4-5 billion.
INDIA GEARS UP FOR WEDDING SEASON
Demand for physical metal in number one gold consumer India rose ahead of its wedding season as the rupee strengthened, dealers in Mumbai said.
"Demand has been good since last week, as prices are down due to a stronger rupee," said Harshad Ajmera, proprietor of JJ Gold House in Kolkata. "Jewellers are comfortable at this rate."
Chinese demand ahead of the Lunar New Year there this month has largely run its course, dealers said. Meanwhile, Chinese supply rose 2.7 percent in November to 32.6 tonnes, the Ministry of Industry and Information Technology said on Thursday.
China is the world's biggest producer of mined gold.
Among other precious metals, silver was up 1.7 percent at $30.45 an ounce.
Demand for silver coins has been strong at the start of the year, with the U.S. Mint reporting American Eagle silver coin sales of 4.257 million ounces in January so far, already a higher volume than recorded in any of the previous three months.
U.S. Mint gold coin sales have also been healthy at 82,500 ounces so far this month, already 26 percent higher than in the entire month of December.
Spot platinum was up 0.4 percent at $1,494.99 an ounce, while spot palladium was flat at $640.22 an ounce.
Platinum climbed for a fourth day on Thursday, on track for its largest weekly gain since October with a rise of 7 percent. Platinum's outperformance of gold pulled the gold/platinum ratio -- the number of platinum ounces needed to buy an ounce of gold -- down to 1.10 from a high of 1.15 earlier this week.
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Gold Rises to Near One-Month High
Business Spectator
Gold rose nearly one per cent to a one-month high, breaking ranks with the euro and equities, as evidence of strong physical demand from China fuelled fund buying after bullion's recent sell-off.
The metal rose for a second day as the single currency hit a 16-month low against the dollar after ratings agency Fitch warned of dire consequences if the European Central Bank doesn't take more action on Europe's debt crisis.
Bullion has gained more than five per cent in 2012, appearing to halt a strong, positive link with riskier assets. In the previous two months, gold had tended to fall when the dollar strengthened, trading in virtual lockstep with the euro.
Spot gold was up 0.7 per cent at $US1,644.36 an ounce by 0400 AEDT. US February gold futures gained $US13.80 at $US1,645.30 an ounce.
Gold's gain brought current prices above their 200-day moving average around $US1,635 an ounce. The metal had held the 200 DMA for around three years until late December.
James Steel, chief commodities analyst at HSBC, said gold had drawn support from macro hedge fund buying.
Gold's rally to a one-month high of $US1,646.90 has given investors more confidence to buy the metal, especially in light of improved demand in India given the rupee's rise against the dollar, and a sharp increase in Chinese imports.
Data showing record gold imports to China late last year has reassured investors that physical offtake is underpinning the market. China, the number-two buyer of the metal, is preparing for the Lunar New Year this month, a key gold-buying period.
China imported nearly a fifth more gold from Hong Kong in November than the previous month, continuing a trend of sharply rising purchases that has seen bullion flows to the mainland more than triple in the first 11 months of the year.
The volume of gold traded has risen in the last week, indicating more investors are active in the market.
According to data from CME Group, which offers the benchmark gold futures contract, volume on Tuesday reached its highest since early December and about 25 per cent above average turnover on a rolling one-month basis.
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Gold Steady Ahead of U.S. Jobs Data
Reuters
Gold was steady on Friday as investors stayed on the sidelines ahead of a U.S. jobs report due later this session, and as risk appetite picked up in the wider markets, knocking the metal's safe haven appeal a notch.
But the metal was still well bid above $1,600 level, with worries over a worsening euro zone debt crisis and sovereign funding pressures providing investors with a strong case for holding bullion.
Spot gold edged up 0.02 percent to $1,622.39 an ounce by 1017 GMT, on course for a weekly rise of 3.4 percent, its strongest in a month.
U.S. gold gained 0.2 percent to $1,623.40.
"We've seen risk on this morning and that has taken a bit of steam out of gold, again indiciating it has become a safe haven play," said Ole Hansen, senior manager at Saxo Bank.
But he added: "Its been a good start to the year, we're still not out of the woods in terms of the technical picture but gold has been holding above $1,600, indicating we could have some further upside potential."
European equities rose earlier amid hopes U.S. jobs data due later will brighten the economic outlook, after a report Thursday showed private-sector hiring surged last month and unemployment claims fell.
Bullion has parted way with riskier assets, with which it had moved in tandem over the past few months, as its safe-haven appeal received a half boost from reviving liquidity at the beginning of the new year.
"Liquidity is back in the market," said a Shanghai-based trader. "With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as gold."
Technical analysis suggested spot gold could retrace to $1,596.24 an ounce during the day, said Reuters market analyst Wang Tao.
Although economic data out of the United States in recent weeks has shown solid progress in the fourth quarter, analysts said the global economy will remain overshadowed by the euro zone debt crisis.
The euro hit at a 16-month low versus the dollar on Friday before recovering slightly, but further falls are expected as worries grow about a worsening euro zone debt crisis and sovereign funding pressures.
A weak euro usually weighs on dollar-priced gold as it makes it costly for non-U.S. investors. However, the metal has this week held its own in the face of a strong dollar as its safe haven appeal has trumped all.
Analysts expect while strong U.S. jobs data might help risk sentiment later this session, it may weigh further on the euro versus the dollar as investors focus on the divergence between the U.S. and euro zone economies.
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