Gold Market Report
PRICE OF BULLION gold in the wholesale London
market touched a 7-session high against the Dollar early on Wednesday,
slipping back as US inflation data came in tamer than expected, and China was
advised by the World Bank to tighten its interest rates.
The Euro rose to its best Dollar-value in almost 5 weeks after the Federal
Reserve maintained its zero-rate stance in Tuesday's policy announcement.
US crude oil contracts meanwhile rose above $82.50 per barrel after Opec
oil-cartel ministers meeting in Vienna kept their output quotas on hold.
"Good demand, reliable supply, beautiful prices – we are very
happy," said Saudi oil minister Ali al-Naimi to reporters.
Back in the gold market, "support is increasing," said Standard
Bank's chief commodities analyst Walter de Wet on Wednesday morning.
"We have seen increased physical buying interest on approach of
"Gold prices moved higher on [last night's] Fed announcement, but failed
at $1132," says a note from another London dealer, "where its
trendline from [the record $1226 set in] December comes in today."
Slipping back to Tuesday's finish at $1124 an ounce, the gold price also fell
vs. the Euro and dropped more than 1% for UK investors – down to
£737 an ounce – after minutes from the Bank of England's latest
policy meeting showed growing unease over the "stickiness" of
Factory-gate prices in the US rose less quickly last month than Wall Street
economists forecast, but the annual rate of increase held steady from Jan. at
"Investors are buying back gold after the Fed decided to keep interest
rates unchanged," a Hong Kong dealer told Reuters earlier.
Even at this morning's higher prices, "There's not a significant amount
of scrap being returned," he added.
Silver prices today turned lower just beneath last week's two-month high of
$17.69 per ounce.
Over in India – home to the world's No.1 private consumers of gold
bullion – "Sales jumped noticeably on Monday," says Swiss
bank UBS. "Our current five-day moving average of sales [to India] is
more than 30% greater than the year-to-date average."
Tuesday marked the start of spring on the Hindu festival calendar –
"auspicious days to buy gold," says Reuters. Next month will bring
the wedding season, culminating with May's gold-buying holy day of Akshaya
New data compiled by the World Gold Council meantime showed today that
emerging-market nations grew their state-controlled gold reserves at a
near-record pace in 2009.
Thanks to China's data revision, India's 200-tonne purchase of IMF gold, and
Russia's "accelerating" acquisition of domestic mine production,
sovereign states outside the OECD club of developed economies now control 21%
of the world's total central bank reserves, says analysis by BullionVault
– almost twice the previous 60 years' proportion.
"[China's] macro stance needs to be noticeably tighter than in 2009 to
manage inflation expectations and contain the risk of a property
bubble," said the Washington-based World Bank in a new report today.
Tuesday saw 130 members of the US Congress publish an open letter to
President Obama, warning that "The impact of China's currency
manipulation on the US economy cannot be overstated.
"Maintaining its currency at a devalued exchange rate provides a subsidy
to Chinese companies and unfairly disadvantages foreign competitors."
"If the exchange rate issue is politicized, then in coping with the
global financial crisis this will be of no help in coordination between the
parties involved," countered China's commerce spokesman Yao Jian at a
scheduled news conference today.
"[China's] trade surplus is not caused by the exchange rate. The trade
surplus is an outcome and phenomenon of globalization. It
will exist for a time."
Head of Research
your first gram of Gold free by opening an account with Bullion Vault : Click
for The Daily Reckoning in London, Adrian Ash is head of research at BullionVault.com –
giving you direct access to investment gold, vaulted in Zurich, on $3 spreads
and 0.8% dealing fees.
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