Gold is trading at USD 1,752.90, EUR 1,298.30, GBP
1,116.10, CHF 1,604, JPY 136,700 and AUD 1,706.4 per ounce.
Gold’s London AM fix this morning was USD
1,751.00, GBP 1,116.50, and EUR 1,298.29 per ounce.
Yesterday's AM fix was USD 1,750.00, GBP 1,113.02, and
EUR 1,298.03 per ounce.
Cross Currency Rates
Gold is marginally higher in most currencies and is
headed for its biggest weekly advance in six weeks after also seeing a gain
of 1.8% in November. Gold’s technical picture has become positive again
and is now aligned with the very positive fundamental backdrop.
The Bank of Korea’s continued diversification of
its foreign exchange reserves is a bullish factor which may have led to the
price gains today.
The central bank of South Korea announced that it had
purchased 15 metric tonnes of gold in November to
raise its reserve of bullion in an effort to diversify its portfolio of its
foreign reserve investment and reduce risks caused by market volatilities.
According to the Bank of Korea (BOK), it made a
purchase of 15 tons of gold last month to increase the nation’s gold
reserves to 54.4 tons worth $2.17 billion as of the end of November.
It boosted the size of its gold reserves by US$850mn in
November, up a massive 39% from the previous month. Its total gold reserves
are now worth US$2.17bn.
The purchase was the central bank’s second
acquisition of gold this year. It bought 25 tons of bullion in June and July
for the first time in 13 years.
Thanks to the buying, the gold reserves of Asia’s
fourth-largest economy jumped by three notches to 43rd in the rankings of the
World Gold Council.
Based on the October reading, Korea is the
eighth-largest holder of foreign exchange the world behind China, Japan,
Russia, Taiwan, Brazil, Switzerland and India.
The Bank of Korea said its gold holdings account for
just 1% of its foreign-exchange reserves.
“The BOK purchased gold last month in a bid to
diversify its portfolio of foreign exchange reserves,” Lee Jung, head
of the investment strategy team at the BOK’s Reserve Management Group,
"Demand for gold is increasing as a hedge against
global inflation amid the persistent sovereign-debt crisis in Europe,"
Lee was quoted as saying.
"The gold purchase will help us cope with volatile
global financial markets and enhance investor confidence in Korea in times of
The move comes as other central banks across the world
are again diversifying into gold amid the worsening financial turmoil in the eurozone. The European sovereign debt crisis is lurching
towards contagion and showing signs of spreading to France and Germany, the
top two strongest economies in the region.
Mexico has bought 98 tons of gold this year, followed
by Russia and Thailand, which purchased 63 tons and 53 tons, respectively,
with the total official acquisition of gold reaching around 350 tons.
South Korea’s foreign exchange reserves stood at
$308.63 billion at the end of November, down $2.35 billion from the previous
month, as the euro, pound, yen and dollar all fell in value versus gold.
Foreign reserves consist of securities and deposits
denominated in overseas currencies, along with IMF reserve positions, special
drawing rights and gold bullion.
It is the second time Korea has bought gold to
diversify its foreign exchange reserves this year. It purchased 25 tons of
gold between June and July -- its first purchase since the 1997-98 Asian
No details were given as to from where the sizeable
tonnage of gold was bought in November – whether it be inter central
bank or from refiners or bullion banks. Nor was information forthcoming as to
whether the Bank of Korea is storing their gold reserves in the central bank
Asian governments have become increasingly concerned
about the problems in the West, with European leaders struggling under the
weight of a crippling sovereign debt crisis that threatens the end of the eurozone and the euro.
The United States has a debt crisis of its own with
politicians unable to agree a plan to bring down the country's titanic
deficit, which sits at more than $15 trillion and increased another $160
billion in the last two weeks alone.
The ongoing woes have led to forecasts of further gold
purchases, especially from Asia.
Gold is becoming increasingly attractive to central
banks worldwide due to the global financial crisis and concerns for the
outlook of the global reserve currency, the dollar and the euro and all fiat
European central banks have stopped selling gold.
China, which has the world's biggest foreign-currency reserves, has been
increasing its gold holdings mainly through domestic producers.
As we have been saying for some time, gold makes up a
miniscule 1.6% of China’s foreign exchange reserves. People’s
Bank of China buying alone could support gold prices in the coming months and
The world average for central-bank gold holdings as a
share of foreign-currency reserves has increased marginally to 11%. The U.S.,
still the world’s largest gold holder of gold bullion, bullion makes up
74% of foreign exchange reserves.
The fundamentals for gold remain very
bullish and yet gold remains largely taboo in the non
specialist financial media. The fundamentals and the facts of the gold
market remain unknown by the majority of the market which is bullish.
Total above ground stocks of refined gold bullion
remain tiny vis-à-vis stock, bond, foreign exchange and derivative
Even a small shift in allocations from these markets
and into physical bullion has the potential to lead to much higher prices.
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Silver is trading at $33.51/oz,
€24.78/oz and £21.32/oz
PLATINUM GROUP METALS
Platinum is trading at $1,561.50/oz, palladium at
$649.25/oz and rhodium at $1,575/oz.
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