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Gold’s London AM fix this morning was USD
1,585.50, EUR 1,221.87, and GBP 984.17 per ounce. Yesterday's AM fix was USD
1,627.00, EUR 1,250.77 and GBP 1,008.99 per ounce.
Silver is trading at $28.77/oz,
€22.27/oz and £17.92/oz. Platinum is
trading at $1,506.75/oz, palladium at $613.20/oz and rhodium at $1,300/oz.
Gold dropped $31.90 or 1.95% in New York yesterday and
closed at $1,606.80/oz. Gold gradually fell again in Asian and European
trading and looks set to test support at $1,580/oz.
Cross Currency Table – (Bloomberg)
Gold hit a 4 month low today despite deepening worries
that the political upheaval in Greece may sink the country into chaos and
endanger the euro zone's efforts to end the debt crisis – possibly
leading to contagion and or a monetary crisis.
Some decent demand from South East Asia has been
reported at the $1,600/oz level and there are also
reports from Reuters of a “semi-official buyer of gold” emerging
“on dip below $1,600/oz”.
Gold’s weakness yesterday may have been again due
to dollar strength and oil weakness - oil is now below $97 a barrel (NYMEX).
It may also have been due to wholesale liquidation which created a new bout
of "risk off" which has seen global equities and commodities all
come under pressure.
However, gold’s weakness yesterday was also contributed
to by more unusual trading activity. As trading in
New York got underway, there was an unusually large bout of selling with some
6,000 gold futures contracts sold in minutes and this led to gold's initial
$10 fall to the $1,615/oz level.
Momentum driven algorithm trading may have then led to
follow through selling and the initial sell off may have emboldened tech
traders to sell more leading to the falls below $1,600/oz.
Given strong store of wealth demand from the Middle
East and China (as seen in figures yesterday), long term buyers will use this
sell off to again accumulate bullion.
Greece’s problems coupled with France’s
election of socialist candidate Francois Hollande
as President creates a disruption of old Franco German alliances. Hollande and the socialist victory in France will likely
be positive for gold as he favours looser fiscal
and monetary policies in the EU.
Spot gold hasn’t seen these levels since early
January and the next level of support for gold is $1,580/oz
and then $1,545/oz – the low on December 29th
2011.
(Bloomberg)
As has been the case in the early stages of nearly all
bouts of sharp risk aversion in recent years the initial beneficiaries have
been the dollar, US debt and German Bunds, while gold was more correlated
with the euro and riskier assets.
However, gold’s correlations with risk assets
have been short term in recent years. Gold has fallen less than other risk
assets, based and then recovered and seen sharp recovery gains soon after the
initial falls.
These recovery gains are often seen while equity and
commodity markets have continued to fall. Similar patterns may be seen in
markets again in the coming days and weeks and short term gold weakness
should again be used to ease into an allocation to gold.
Nouriel Roubini has again
taken to Twitter to engage in his semi annual bout
of name calling and frequent suggestions that gold is a bubble and that gold
will fall in price. He has been doing so since gold rose above $1,000/oz in 2008.
Overnight he tweeted how “Gold getting close to
fall below 1600. In which caves are the gold bugs hiding...?”
Nouriel Roubini @Nouriel
Gold getting close to fall below 1600. In which
caves are the gold bugs hiding...?
This continues the recent meme regarding gold investors
and store of wealth bullion buyers being ‘bugs’, people or
animals who ‘hide’ in ‘caves’ or are “uncivilised” people.
Attacking the ball and not the man is a way to avoid
engaging in real debate regarding the merits of gold as a diversification and
as an academically and historically proven safe haven – one that has
protected people both throughout history and again in recent years.
It is interesting that Roubini has not written a paper on gold nor has he
conducted an interview about gold or written an article about gold in recent
years. He confines his simplistic, ill informed
anti gold comments to Twitter where he can be brief and not have his faulty
thoughts and logic examined.
From a contrarian perspective, Roubini
is a gift as his name calling and anti gold
comments almost always coincide with an intermediate low in the gold price.
Prudent diversifiers are advised to buy this latest dip
- what could be termed the ‘Roubini
dip’ - as many have done overnight and this morning – including
store of wealth buyers in Asia and central bank monetary diversification
buyers.
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
XAU/EUR 1 Year Chart – (Bloomberg)
OTHER NEWS
(Bloomberg) -- Gold to Rebound to $1,700 an Ounce This Year: Technical
Analysis
Gold will rally to $1,700 an ounce later this year after trading below
$1,600, according to technical analysis by Barclays Plc.
“The metal may slip to about $1,580 an ounce and
then $1,525 an ounce, a level close to the weekly low seen in late December,
before rebounding to $1,700 an ounce, the high seen in late March,” Dhiren Sarin, chief technical
strategist for Asia Pacific at Barclays, said today by phone from Singapore.
Bullion has climbed 1.8 percent this year after a 10
percent increase in 2011, the 11th consecutive annual gain as investors
sought to diversify from equities and some currencies amid concern over
Europe’s debt crisis and expectations that central banks will add
further stimulus, boosting haven demand.
“About the rebound to $1,700, it’s a bit of
wait and watch but $1,580 is a potential place where buyers may come in and
$1,525 to $1,530 area is another potential area,” he said, referring to
levels singled out in Fibonacci analysis.
XAU/GBP Currency Chart – (Bloomberg)
Gold fell as much as 0.7 percent to the lowest level
since Jan. 4 and traded at $1,594.05 an ounce at 12:13 p.m. Tokyo time,
losing for a third day as Greece’s leaders struggled to form a
government, increasing concern that the region’s debt crisis will
escalate and boosting the dollar as a haven.
In technical analysis, investors and analysts study
charts of trading patterns and prices to predict changes in a security,
commodity, currency or index. Fibonacci analysis is based on the theory that
prices rise or fall by certain percentages after reaching a high or low.
NEWS
Gold, Silver Tumble as Deadlock in Greece Drives
Dollar Higher – Business Week
Gold dips to 4-month low on Greece uncertainty
– Reuters
Gold, Silver Tumble as Deadlock in Greece Drives
Dollar Higher - Bloomberg
Global shares, commodities retreat on Greek
uncertainty – MSN
Silver Forecasters Bullish as Funds Retreat From Slump
- Bloomberg
COMMENTARY
Ron Paul Has a Gold Ally in the Buffett Family
– The Street
Mauldin: End of the Debt Supercycle
Draws Near – Casey Research
Did He Just Call You “Uncivilized”?
–Agora Financial
Economic Alert: If You’re Not Worried
Yet…You Should Be – Zero Hedge
"Uncivilized" China Quietly Building Gold
Reserves As Gold Imports From HK Soar By 587% In First Quarter
– Zero Hedge
Why Civilized People Buy Gold - GoldSeek
Mark
O’Byrne
Goldcore
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