|
Gold’s London AM fix this morning was USD
1,548.75, EUR 1,244.98, and GBP 995.41 per ounce. Yesterday's AM fix was USD
1,573.75, EUR 1,254.48, and GBP 1,003.67 per ounce.
Silver is trading at $27.75/oz,
€22.39/oz and £17.87/oz. Platinum is
trading at $1,416.25/oz, palladium at $597.75/oz and rhodium at $1,275/oz.
Gold fell 0.89% or $14.00 in active trading yesterday
and closed at $1,558.80/oz. Gold fell marginally in Asia but remains in a
tight range. In European trading gold is hovering near the $1,550/oz level.
Determined selling at the $1,580/oz level capped
gold yesterday prior to a bout of sharp selling. This saw gold quickly fall
$20 from $1,575/oz to $1,555/oz
on heavy volume. Tuesday’s COMEX gold futures volume was well over
450,000 lots – which is close to the record for 2012 and volume more
than doubled its 30 day average.
Gold 5 Day Chart – (Bloomberg)
Counter intuitively, gold turned sharply lower due to
another bout of concentrated selling despite a distinct lack of market moving
news – indeed market news was quite gold bullish. There were mere rumours that Egan Jones had downgraded Spain. The
downgrade rumour , which was subsequently confirmed, saw the euro fall
only marginally - from 1.253 to 1.248 and little movement in equities.
Gold is weaker again today despite heightened risk
aversion on fears that the euro crisis is escalating. Concerns about Italy
have resurfaced after their 10 year bond yield rose above the important 6%
level this morning.
Gold has recently tracked the euro as many investors opted
for the dollar over safe haven gold bullion in the near term. This was
graphically seen during the Lehman and AIG crisis when gold also fell in the
short term prior to quickly basing and making a speedy recovery soon after.
We would expect a similar pattern to take place again
and the counter intuitive short term gold price movement of late will likely
soon give way to a reassertion of the gold’s primary secular bull
market trend.
Cross Currency Table – (Bloomberg)
Ongoing concerns about the euro, the downgrading of
Spain and the risk of contagion is of course bullish for gold but gold can
often be correlated with risk assets such as equities (and risk currencies
such as the euro) in the short term.
Gold has risen from below €500 to over
€1,200 in last 5 years so correlation with the euro is clearly short
term.
Gold is inversely correlated with the dollar and all
fiat currencies over the long term and best for investors and store of value
buyers to fade out the short term noise of gold's corrections and short term
correlation with risk assets.
Greece's elections on June 17th may be a short term
positive for the euro if pro bailout parties win, however this is way too far
away to call and the scale of the debt crisis in Europe suggests that
national currencies may return or that the euro will be devalued or a
combination thereof.
Some market watchers are waiting for central banks to
give a clear signal as to whether they are going to inject trillions of more
euros, pounds and dollars into struggling economies.
The near certain further debasement of currencies in
the coming months will benefit gold.
Gold 1 Year Chart – (Bloomberg)
India’s recent gold purchasing power has been
hurt by the country’s weak currency and it is expected that buying will
remain slow until their rainy season ends in September.
However demand from China and the rest of Asia remains robust. "While Indian demand has been lower
than normal, overall we continue to see decent buying interest from the rest
of Asia," says Standard Bank, “especially South East Asia.”
Speculators and some investors are waiting on the
sidelines for more clues regarding price direction but smart money such as
George Soros, David Einhorn, Kyle Bass, Marc Faber,
pension funds, institutions such as PIMCO and central banks continue to
diversify into gold.
The smart money understands the diversification
benefits of gold and knows that investments,
pensions and protecting and preserving wealth is about owning quality assets
and currencies over the long term.
OTHER NEWS
(Reuters Global Gold Forum) -- In a note this morning, Barclays
Capital says that from a technical perspective, it is neutral on gold and
silver in the medium term. "The lows near 1520 underpin our greater
bullish view for gold," it said. "Near term we expect a range to
unfold under 1620. We are also bullish for silver while above 26.00. Our
initial upside targets for silver are in the 29.00 area."
(Reuters Global Gold Forum) -- The world's biggest silver-backed
exchange-traded fund, New York's iShares Silver
Trust , reported a heftyish 45-tonne outflow
yesterday, its biggest one-day outflow since May 9, when its holdings
declined by more than 120 tonnes.
(Bloomberg) -- Standard Chartered Says Platinum Prices Are ‘Oversold
for Now’
Platinum is “oversold for now,” partly on concerns about
output in South Africa, Standard Chartered Plc said
in a report e-mailed today.
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
NEWS
Gold hits one-week low on euro weakness
- Reuters
Gold Slips In Asia As Euro-Zone Worries Weigh
– Wall Street Journal
Italian, Spanish Bond Yields Surge -
Wall Street Journal
Gold loses over $20 as dollar gains on Spain
- MarketWatch
COMMENTARY
Europe’s Debtors Must Pawn Their Gold For
Eurobond Redemption – The Telegraph
Germany Has A Generous Proposal To The Broke PIIGS:
"Cash For Gold" – Zero Hedge
ECB Calls Spain's Bluff... Or Does It? And Did
Europe Just Check To The Fed? – Zero Hedge
Greyerz - $100 Trillion+ to be Printed, Expect Capital
Controls – King World News
Newmont CEO - China Doing Everything It Can to Get
Gold – King World News
Gold's "Contrarian Moment"
- GoldSeek
Mark
O’Byrne
Goldcore
|
