The wholesale market gold price
rose again as New York trading began on Wednesday, extending
yesterday's 1.8% jump to reach $1,620 per ounce as new data showed US retail
sales falling faster-than-expected in May.
Silver bullion recovered
an earlier slip to trade just shy of $29.00 per ounce. The euro currency held
flat but European stock markets slipped with commodity prices.
Spanish borrowing costs rose to new euro-era highs at 6.73% for 10-year
debt, while Italian bond yields also rose to a 6-month record, unwinding the
effect of €1.1 trillion in LTRO
loans made by the European Central Bank to commercial lenders last
Rome today cut to €6.5 billion the amount of new one-year debt
being sold at auction, but it still had to pay investors 3.97% per year in
interest – well over one-point-five percentage points more than at the
last time of asking in May.
"If euro bond yields continue to escalate," says one gold
dealer in Asia, "gold could remain [well] bid."
Weaker-economy euro-zone bond yields have now reached or breached levels
seen before the European Central Bank lent commercial banks €1.1
billion in 3-year loans starting December last year.
The gold price
for euro investors today jumped €41,500 per kilo,
a level first reached in mid-August 2011 and approached this week on what
analysts variously called "central bank...Chinese [or] Indian...private
banking [or] electronic buying."
"Who knows?" asks one precious metals strategist in a note.
"Apparently no one in the market."
Tuesday was "the 7th consecutive day of alternating between 'Up' and
'Down' days" in the gold price,
notes Russell Browne at market-making bullion bank Scotia Mocatta.
"From a price perspective, the 1559 support is key
ahead of 1528 [while] 1640 is the topside trigger for a move higher."
"Consolidation is ongoing," agrees Axel Rudolph at Commerzbank
in Luxembourg, also saying the gold price
"remains essentially range bound within the confines of its major
1532 support zone...and the 1641 current June peak."
Buying commodities such as gold "at current lows" has
"always been profitable" over the last 18 months, said Kevin
Norrish, managing director of commodities research at Barclays, speaking in Johannesberg, South Africa, today.
"A break below [current levels] would be a major change" to the
long-term trend, he said.
After Finnish finance minister Jutta Urpilainen said Helsinki wants collateral for its portion
of the €100 billion credit line agreed with the Spanish government to
support its banking sector last weekend, "Rumors about backing for the
EFSF [euro zone stability fund] could prove to be bearish news for the gold price," says a note from Swiss
refining and finance group MKS, "as countries may have to use their gold
reserves if they run out of other assets to post, should gold be allowed as
Over in the United States, says a new presentation from Société Générale's
Cross Asset Research team, "The prospect of the Fed launching QE3 soon
now that the US economy appears to be slowing [means] gold should rally.
"We see scope for the gold price
to trade back above $1,700 soon, but we are no longer forecasting new
all-time highs," says SocGen, pointing to weak
"A significant supply surplus" requires what the banks'
analysts call "investors and speculators" to buy almost 2,000 tonnes both in 2012 and 2013 to balance the market.
Meantime in the euro zone, withdrawals from Greek banking deposits
"have seen a marked increase" according to un-named bankers
speaking to Reuters.
Daily outflows from ATM cashpoints, investment and Greek bank accounts to
other euro-zone member states now total some €500-800 million per day,
say the sources.
"Despite the [gold price]
push above $1,600," says today's note from
Standard Bank's commodity analysts, "physical demand remains fairly
However, the bank adds, the premium over benchmark London prices asked by
Shanghai dealers "came off slightly" overnight, indicating a market
"that is cautious on gold and unwilling to add long positions."
World #1 gold consumer India could see its credit status cut to
"junk", said the Standard & Poor's rating agency Monday, owing
to the slow pace of economic reforms and yawning
Taking the rupee back towards all-time record lows against the US dollar,
"this has resulted in near record prices for gold in rupee terms,"
says Standard Bank, "and a consequent fall-off in physical buying from