SPOT MARKET gold prices rose to a one-month high of just under
1647 per ounce Wednesday morning – a 5.1% gain for January – before
easing back as the Dollar rallied on the currency markets.
The gold price in Euros meantime touched levels not
seen since December 8, hitting €41,502 per kilogram (€1290 per
ounce), while the Euro currency fell to 15-month lows against the Dollar
following disappointing German growth data.
The previous day saw spot market Dollar gold prices
break through their 200 day moving average, which yesterday sat at $1626.86 per
ounce by PM London Fix prices.
"The move higher today was not expected as it was
against a bearish picture," writes Russell Browne, technical analyst at
bullion bank Scotia Mocatta, adding that "it
will take a number of days of closes above the 200 day moving average to give
the bulls confidence to re-enter the market."
"While the Dollar may not see a significant
correction soon," says a note from Societe Generale, "and is likely to continue to gain against
the Euro as the Eurozone crisis persists, the
negative effects of a stronger Dollar on gold are likely to be largely
diminished in 2012, allowing the bullish macro drivers to dictate price action
Silver prices meantime rose to $30.31 per ounce
– level with the week's high and 8.6% up for the month so far –
before they too eased back, while stocks and commodities ticked lower and major
government bond prices gained.
Germany's economy shrank by 0.25% in the fourth
quarter of 2010, newswire Reuters reports, citing an official from the Federal
Statistics Office. For 2011 as a whole, gross domestic product grew at 3.0%,
down from 3.7% a year earlier, official data show.
Growth in the Eurozone
meantime was half that initially reported in Q3, European Union statistics
agency Eurostat now says, after revising Q3 2011
growth from 0.2% to 0.1%.
"Germany cannot isolate itself so easily from
tensions within the Eurozone," says Joerg Zeuner, chief economist at
VP Bank in Liechtenstein.
"In addition the export sector is facing a
difficult period given the fall in global demand."
"The best resolution [to the Eurozone
crisis]...is that Germany take steps to reverse its
trade surplus," argues Beijing-based economist Michael Pettis.
"[However,] countries that run large and
persistent trade surpluses never seem to understand that their surpluses are
mainly the consequences of domestic policies that generate additional domestic
growth by absorbing foreign demand."
Italian prime minister Mario Monti has called for more support from the European Union
ahead of a meeting in Berlin today with German chancellor Angela Merkel.
"I am demanding heavy sacrifices from
Italians," he tells German newspaper Die Welt.
"[Unless] concrete advantages become visible...a
protest against Europe will develop in Italy, including against Germany, which
is seen as the ringleader of EU intolerance, and against the European Central
Almost the entire €489 billion the ECB lent to Eurozone banks at last month's 3-Year longer term
refinancing operation has been redeposited with the
central bank reports news agency Bloomberg, citing estimates from Barclays
Capital made using ECB data.
"It's illusory to think that the [3-Year LTRO]
will translate into credit generation," says Philippe Waechter,
chief economist at Natixis Asset Management in Paris.
"It will assuage some of the anxiety banks have
regarding their liquidity needs. But they've engaged into a massive overhaul of
their strategy and shrinkage of their balance sheets, which is, coupled with
the deteriorating economy, not compatible with increasing credit."
Authorities in Iran meantime have blamed Israel for a
car bomb that killed a nuclear scientist in Tehran.
Also in Iran, local press reported yesterday that
officials had denied rumors that the authorities were blocking any text
messages that contained phrases such as 'Dollar' or 'foreign currency'. The
imposition of US sanctions has reportedly led to increased interest in holding
gold and Dollars as a hedge against Rial depreciation.
Gold bullion dealers reported strong demand from India
on Wednesday, Reuters reports, as the Rupee rallied 1.5% against the Dollar to
hit a one month high. The weak Rupee saw record domestic gold prices in India
last year, weighing on demand during what is traditionally a strong season for
China meantime imported a record volume of gold from
Hong Kong in November, according to official data. The Hong Kong government's
Census and Statistics department reports that just under
102.8 tonnes of gold were imported by China,
equivalent to 18% of China's total private sector gold consumption in 2010 by
World Gold Council figures. Imports from Hong Kong are generally regarded as a
proxy for overall imports.