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Gold’s London AM fix this morning
was USD 1,654.00, EUR 1,250.28, and GBP 1,019.60 per ounce. Yesterday's AM
fix was USD 1,648.25, EUR 1,246.22 and GBP 1,017.88 per ounce.
Silver is trading at $30.16/oz, €23.65/oz and
£19.29/oz. Platinum is trading at $1,576.25/oz,
palladium at $658.75/oz and rhodium at $1,350/oz.
Gold rose $13.80.60 or 0.84% in New York
yesterday and closed at $1,657.60/oz. Gold traded initially sideways in Asia
then it dipped downward and recovered in early European trading.
Cross Currency Table – (Bloomberg)
Support for gold is at $1,624/oz and $1,612/oz and resistance
is at $1,663/oz and $1,684/oz.
Gold is some 1% higher on the week in USD
and EUR and the higher weekly close would aid the poor short term technical
picture.
Gold consolidated on the gains seen
yesterday as the downgrading of Spain's credit rating added fuel to concerns
about the debt stricken euro zone. Spain and Italy’s debt servicing
costs rose again this morning and the Spanish 10 year touched 6% again.
Gold’s gains may have been tempered
by a stronger dollar after the latest easing move by the Bank of Japan. The
BOJ expanded the size of its fund for asset buying by 10 trillion yen to 40
trillion yen.
The BOJ may also extend the duration of
government bonds it buys to about three years.
The move saw the yen fall overnight but
it has since recovered and is the strongest currency so far today.
While periods of strength can be expected
the long term outlook for the yen is poor.
The BOJ looks set to continue debasing
the yen for the foreseeable future which will result in the yen falling
against gold in the long term. The yen has already fallen by nearly 11%
against gold year to date (see chart below).
Gold YTD in USD-White, GBP-Orange, JPY-Pink and
EUR-Yellow - (Bloomberg)
Bullion hit a 2 week high at $1,660.60
yesterday despite somewhat better US housing data and the Fed’s
somewhat brighter economic outlook.
The Fed’s promise to use more QE
should the economy falter is supporting gold.
The global economic picture remains grim,
with euro zone economic sentiment falling more than expected in April and the
US job market recovery showing signs of a slowdown.
Apple earnings and the tech boom and
indeed possible tech bubble remains one of the primary drivers of continuing
irrational exuberance and risk appetite.
The poor and deteriorating economic
backdrop is gold supportive.
Gold Analysts More Bullish As Debt
Crisis Not Over – “Buying Opportunity”
Gold analysts are more bullish after central banks expanded their bullion
reserves and hedge funds increased bets on a rally for the first time in
three weeks.
14 out of 28 analysts surveyed by
Bloomberg expect prices to rise next week and 9 were neutral, the highest
proportion in 2 weeks.
Central bank demand and CFTC data is one
of the reasons for their positivity on gold.
Mexico, Russia, Argentina and Turkey were
some of the many central banks that added over 51.8 metric tons valued at
$2.8 billion to reserves in March, IMF data show.
Fund managers raised their long positions
by 2.5% in the week ended April 17, according to the CFTC.
Ultra-loose monetary policies of recent
years and the problems in the euro zone don’t look like they’re
going to end any time soon.
The Fed bought $2.3 trillion of debt in
two rounds of QE ending in June 2011. We and other analysts believe that it
is only a matter of time before the US embarks on QE3.
The UK saw its first double- dip
recession since the 1970s, data showed April 25th, while the IMF predicts the
17-nation euro region will contract.
Gold in USD 1 Week – (Bloomberg)
This week is a fresh reminder of the
global nature of the crisis with concerns about the UK, US and Japan
remerging alongside Spain, euro and Eurozone concerns.
Gold below its 200 day moving average
remains a buying opportunity – especially for people exposed by not
having any allocation to bullion whatsoever.
OTHER NEWS
(Reuters Global Gold Forum) - Sales of American Eagle silver coins
from the U.S. Mint are on track to hit their lowest monthly rate since July
2008 in April, figures from the Mint showed, at 1.28 million ounces, against
2.542 million ounces in March.
(Reuters Global Gold Forum) - The Shanghai
Futures Exchange (ShFE) said it will cut trading
commission for various contracts from June 1 in a move to support liquidity.
Gold trading commissions will be cut to 20 yuan
($3.17) per lot from 30 yuan per lot, it said.
(Bloomberg) -- Economist Gartman Swapping Gold in
Yen Trade for Gold in Euros
Economist Dennis Gartman is swapping his gold
position priced in yen for bullion priced in euros, he said today in his
daily Gartman Letter.
(Bloomberg) -- Gold May Advance
Above $1,700, Infinity Says: Technical Analysis
Gold, heading for a third straight monthly loss, may rally above $1,700 an
ounce if prices are able to break above a so-called pennant formation,
according to technical analysis by Infinity Trading Corp.
The attached chart shows the precious
metal trading in a “pennant flag” formation, when the upper and
lower trend lines for prices meet to form a triangle or narrow, tapering flag
shape, said Fain Shaffer, Infinity’s president. The lower band is
$1613, and the upper level is $1,681, he said. Prices may also rally after
New York futures yesterday closed above the 20- day moving average for the
first time since April 13, he said.
“The market has showed some
strength, and we may see a break to the upside,” Shaffer said in a
telephone interview from Medford, Oregon.
Yesterday, gold futures for June delivery
rose 1.1 percent to settle at $1,660.50 an ounce on the Comex
in New York, the biggest gain for a most-active contract since April 12. The
20- day moving average is near $1,651. Prices have dropped 0.7 percent this
month.
In technical analysis, investors and
analysts study charts of trading patterns and prices to predict changes in a
security, commodity, currency or index.
(Bloomberg) -- French Assets in
Russian Reserves Rise to 23.8%, Kommersant Says
Russia’s central bank increased the country’s holdings of French
assets last year while reducing the weight of U.S. and German investments, Kommersant reported.
The total value of French assets in
Russia’s international reserves rose to $117.9 billion at the end of
last year, or 23.8 percent of the total, from $79.2 billion in 2010, the
Moscow- based newspaper said, without saying where it got the information.
The new French investments include $23.2 billion in French government
securities and $19.3 billion from Banque de France,
Kommersant reported.
Russia’s assets in the U.S. fell by
$23.4 billion, while the amount kept in Germany dropped $23.1 billion, the
newspaper said. Last year Bank Rossii decreased the
amount of state debt in its portfolio while boosting the share of short-term
deposits in foreign banks and holdings of precious metals, the newspaper
said.
(Bloomberg) -- Gold ETP Holdings
Drop to 2,389.62 Tons, Lowest Since Feb. 20
Gold holdings in exchange-traded products backed by the metal fell 0.14
metric tons to 2,389.62 tons, the lowest since Feb. 20, data tracked by
Bloomberg showed.
Mark
O’Byrne
Goldcore
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