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.
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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.
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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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Gold Climbs as the Euro Rebounds 1 Percent
Gold prices rose to their highest in nearly a week on Tuesday as the euro rallied 1 percent versus the dollar, but volume was light and short-term traders were unwilling to take big risks before year end.
Commodities rose generally along with stock markets as investors' focus on positive U.S. economic readings, an successful Spanish debt auction and an improved German business reading sharpened their appetite for higher risk assets.
Spot gold was up 1.35 percent at $1,614.39 an ounce at 2 p.m. EST. Prices approached, but did not reach the
200-day moving average at $1,621.43 an ounce. Bullion broke below the key technical level last week for the first time since January 2009, when prices slid about 7 percent.
U.S. February gold futures settled year end, prices stuck to narrow ranges.
Commodities rose generally along with stock markets. Investors focused on positive U.S. economic readings, a successful Spanish debt auction and an improved German business reading, which sharpened their appetite for higher-risk assets.
Spot gold was up 1.35 percent at $1,614.39 an ounce at 1400 EST (1900 GMT). Prices approached, but did not reach the $20.9 per ounce, or 1.31 percent, higher at $1,617.6 an ounce.
"The afternoon rally in risky assets and gold seems to have been spurred by better-than-expected U.S. housing data, which in turn further pushed the U.S. dollar lower," said BNP Paribas analyst Anne-Laure Tremblay.
"The rebound in the gold price could prompt some short-covering, and we could retest the 200-day moving average in the coming days," she added.
The euro hit its highest since December 13 versus the dollar, helped by a sharp fall in Spanish short-term borrowing costs and by fresh signs that the German economy is holding up in the teeth of the euro zone debt storm. <FRX/>
The single currency has been on a steady downward trajectory versus the dollar since it peaked in late October. The dollar's gains have weighed on gold, putting the metal on track for its first quarterly loss in more than three years.
Confidence in the metal remains fragile as concerns persist that policymakers' efforts to address the euro zone debt crisis are inadequate and could keep European assets under pressure.
"All the bull-run dynamics are still in place, but you have this trend of the strengthening dollar, positive data out of the United States as opposed to weak data out of Europe," said VM Group analyst Carl Firman.
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Gold Sets New High Record on Rupee Depreciation
The Business Insider
After hitting Rs 29,000 per 10g for the first time due to a 1.4 per cent slump in the value of the rupee against the greenback, standard gold in Mumbai’s Zaveri Bazar slipped on profit booking by small traders.
Standard gold with .995 per cent purity settled on Wednesday at Rs 28,825 per 10g, a rise of Rs 195 or 0.68 per cent from the previous day’s level at Rs 28,630 per 10g. Similarly, pure gold jumped on Wednesday to close at Rs 28,960 per 10g, a rise of Rs 205 from Rs 28,755 per 10g yesterday.
Silver also joined the rising bandwagon and recorded a spurt of Rs 260 to close on Wednesday at Rs 58,125 a kg from the previous day’s close at Rs 57,865 a kg.
Attributing the price rise to a depreciating rupee, Prithviraj Kothari, managing director of RiddiSiddhi Bullion and president of the apex trade body, the Bombay Bullion Association, said, “Buyers have run out of the market. Jewellers are facing huge selling pressure both from stockists and retail consumers who want to book profit at the current high prices.”
Spot gold in London fell after trading above $1,800 an ounce for the first time in nearly two months, to trade at $1,782.60 an ounce as profit booking pulled prices down, amid apprehension that the resignation of Italian Prime Minister Silvio Berlusconi may improve the picture of the euro zone investment risk. Selling pressure started in London as investors saw less reason to hold gold as a hard asset, hoping that European leaders would now re-focus on ending the region’s debt crisis.
Spot gold fell 0.7 per cent to trade at $1,782.60 late afternoon after peaking at $1,802.60 an an ounce, the highest level since September 21. Earlier gold contract for delivery in December settled up $8.10 at $1,799.20 an ounce at the COMEX division of the New York Mercantile Exchange.
The sudden spurt in price hit the retail jewellery shops across the country, with fresh booking almost nil. Consequently, stockists that had booked the precious metal for retailing in small lots started offering a discount between Rs 200-250 per 10g, one of the highest discounts in recent times, to attract customers in order to generate fund from existing stocks.
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Gold Rises with Equities on Optimism Over EU Summit
Reuters
Gold rose 1 percent on Friday, breaking a four-day losing streak, as bullion moved in sync once again with riskier assets on optimism European leaders will be able to contain the region's debt crisis.
Gold posted its biggest one-day gain in two weeks as Wall Street and commodities rallied after the euro zone's two biggest powers France and Germany said they would meet twice -- on Sunday and Wednesday -- to prevent the crisis from engulfing the entire 17-nation currency area.
The metal was 2.5 percent lower for the week, its biggest decline in four weeks, falling in tandem with riskier assets such as equities and industrial metals.
Gold option volatility has increased this week as calls were bid up by funds seeking a hedge against downside risks for their futures positions amid high uncertainty about the situation in Greece and the EU.
"As the moves are getting larger again, that is definitely a sign that volatility will be coming back in the market as investors are interested in participating into gold again," said Mihir Dange, COMEX gold options floor trader for Arbitrage LLC.
Spot gold was up 1.2 percent at $1,637.39 an ounce by 3:13 p.m. EDT.
U.S. gold futures for December delivery settled up $23.20 at $1,636.10 an ounce. Volume for Friday's rally was about half of its 30-day average, consistent with the quiet trading pace of the past two weeks.
Gold has increasingly performed like a risk-linked commodity. Bullion's unusual positive correlation with the S&P 500 stock index has risen to its strongest in four months, and the metal's positive link with bellwether industrial metal copper has climbed to its tightest in almost a year.
EU SUMMIT IN FOCUS
Bullion accelerated gains earlier in the session after sources at the German government said there were no serious differences between Germany and France.
"It's not surprising to see buyers begin to step in here out of concern that they would miss an opportunity for another (rally)," said Mark Luschini, chief investment strategist at broker-dealer Janney Montgomery Scott, which has $54 billion in assets under management.
However, investors remain jittery as France's push to use more European Central Bank money to fight the euro zone debt crisis ran into strong resistance from Germany and other EU partners.
The metal also benefited as the dollar .DXY fell nearly 1 percent against major currencies as investors' risk appetite grew ahead of the EU summit.
On charts, technical analysts said that gold remained vulnerable to a further sell-off after it broke below its 100-day average on Wednesday. Bullion will find support at sharply lower prices at below $1,600 an ounce, they said.
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Gold posts biggest gain in 6 Weeks on Europe Hopes
Gold rose on Friday, posting its biggest weekly gain in six weeks, as optimism about European plans to contain the region's debt crisis and a dollar drop lifted bullion with riskier assets in a broad rally.
Bullion tracked U.S. stocks and industrial commodities such as copper and oil higher, as French and German officials are trying to finalize a crisis resolution plan at this weekend's G20 meeting in Paris. Also supporting was news that China's inflation dipped, easing worries of further tightening.
Optimism over plans to tackle the debilitating euro zone debt crisis, as well as strong U.S. retail sales and corporate earnings, helped prompt the traditionally safe-haven metal to move in tandem with equities.
"The correlation between gold and risk assets is going to trade fairly in tandem because they are working on the same catalyst -- the notion that easy monetary policy in Europe is going to lift equities and also gold," said Sean McGillivray, head of asset allocation in Great Pacific Wealth Management.
Spot gold was up 0.9 percent at $1,680.39 an ounce by 2:29 p.m. EDT.
The metal rose 2.5 percent for the week for a second weekly gain. The S&P 500 was on track to rise over 5 percent, while the dollar index .DXY lost almost 3 percent.
U.S. gold futures for December delivery settled up $14.50 at $1,683 an ounce.
Trading volume has been sharply below the norm all week long. The turnover of U.S. gold futures has topped the average daily volume of 17.5 million ounces of gold on just one trading day so far this month.
Analysts said there was a lack of conviction among bullion investors, while uncertainty over Europe continues.
Decreasing liquidity tends to result in elevated volatility, which in gold hit a 2-1/2 year high in the early part of this month before subsiding.
The 30-day correlation between gold and world equities turned positive for the first time in three months. And the inverse link between gold and the dollar was at its tightest since July, indicating lack of clear direction.
Gold ended above its 20-day moving average for the first time in a month, and technical analysts said bullion could retest its bearish double top set between late August and early September should prices rise above $1,700 an ounce.
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