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WHOLESALE PRICES to buy gold
and silver with Dollars both eased back after touching new 5-week highs in
London, rising 1.3% and 3.0% respectively for the week-so-far as the US
currency fell further from this week's 17-month high to the Euro.
Global equities rose for the fourth day running, with shares in Bank of
America adding 6.1% in pre-market US trade after it reported
better-than-forecast quarterly earnings.
Rising to a two-week high above $1.29, the Euro pushed the price to buy gold
for citizens of the 17-nation currency union below last week's finish at
€41,500 per kilo.
Talks in Athens between government and investor representatives seeking to
agree a 50% writedown of Greek bonds – and
the interest rate on replacement debt – entered their second day.
Both the Spanish and French governments meantime raised new loans from bond
investors at slightly lower interest rates than at the last time of asking,
despite last weekend's downgrade to their credit ratings.
"Momentum [in prices to buy gold] did slow in overnight Asia
trade," says a note from one London dealer, pointing to Wednesday's late
rally.
"Precious metals lacked direction again," says another, noting how
"the conflict between risk-on and risk-off trading" in financial
markets is "clearly influencing the indecisive price action" in
gold, silver bullion and the other precious metals.
In the commodities market today, European Brent crude oil rose to $111 per
barrel after Iran's ambassador to Washington told US television that closing
the Strait of Hormuz shipping route is "an option" if Tehran
suffers further international sanctions over its nuclear program.
Copper prices meantime rose to a four-month high in London, as reports from
China – the world's No.1 consumer of the metal – claimed that
Beijing will delay tighter bank regulations in a bid to boost economic growth
from the two-year low of 8.9% seen at the end of 2011.
"Investors should look at China," says John Smolinski,
manager of the US$2.8 billion TD Canadian Equity Fund, now rebuilding his
positions in base-metal and other commodity producer equities.
"Yes, the economy is slowing, housing prices are going down, the level of construction is slowing. But that's probably
a good thing. At some point the government officials should get comfortable
enough and start easing [credit supply], and that should be good for
commodities."
Figures from ICBC – the world's largest bank by stock-market cap
– said Thursday that 2.33 million Chinese citizens now buy gold through
its gold accumulation savings account.
Launched in April 2010, the program currently holding 22 tonnes of bullion.
Comparable schemes in Japan reached 0.7 million accounts at their peak,
according to Bruce Ikemizu, manager of Standard
Bank Tokyo.
"The Chinese really love gold," said ICBC's deputy head of precious
metals Shi Xudong to reporters today.
"The fact that the government has started to clean up the gold market is
favorable to our business," he added –
pointing to this month's ban on all but two officially recognized Shanghai
exchanges for trading gold futures contracts.
Looking more globally, "Gold's key pillars of support remain
intact," reckons a research note today from Barclays Capital here in
London, "ranging from central bank buying to negative interest rates and
rising longer-term inflationary pressures supporting investment demand."
Interest rates on UK government bonds fell Wednesday to fresh all-time lows
as debt prices rose, knocking the 10-year gilt yield down to 1.92%.
Consumer price inflation in the UK last month dipped to 4.2% per year,
according to official statistics. Bank deposit interest rates have now been
negative – after inflation – since May 2008, costing savers 2.5%
of their money in real purchasing power during 2011.
Total UK debt – including government, corporate, consumer and banking
– rose to 507% of annual economic ouput in
2011 according to new research released Thursday by McKinsey analysts, up
from 310% a decade ago and higher than any other major economy including
Japan.
Over in the Eurozone, "The EFSF [stability fund] losing S&P's top
credit rating proves in my opinion that there are limits to solving the
crisis," said German Bundesbank president
– and ECB voting member – Jens Weidmann
in a speech last night.
The ECB has now bought €217 billion ($279bn) of government bonds issued
by Euro member governments since May 2010.
"It is clear that Italian and Spanish mid cap [banks] have no other
option than to rely upon the [European Central Bank] for their funding
needs," says a note from Morgan Stanley analysts, listing 38 banks who
participated in last month's €489 billion loan of 3-year money, quoted
by the Financial Times' Alphaville blog.
The ECB will repeat its unlimited offer again at the end of February.
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