Gold’s London AM fix this morning was USD
1,631.75, EUR 1,239.65, and GBP 1,027.75 per ounce. Yesterday's AM fix was
USD 1,674.75, EUR 1,254.03 and GBP 1,044.17 per ounce.
Silver is trading at $32.01/oz,
€24.31/oz and £20.16/oz. Platinum is
trading at $1,622.20/oz, palladium at $640/oz and rhodium at $1,350/oz.
Cross Currency Table – (Bloomberg)
Gold fell $30.70 or 1.83% in New York yesterday and
closed at $1,646.30/oz. Gold traded sideways in Asia prior to a further $10
drop after the open of European trading.
Heightened risk aversion saw all markets fall yesterday
after the Federal Reserve said inflation appears to be under control and
suggested that the Federal Reserve may be reluctant to further debase the
dollar with more QE.
This weakness continued in Asia where the Nikkei fell
by 2.3% and European indices are down this morning.
The minutes came out just a week after Fed chairman Ben
Bernanke alluded to the possibility that further QE and stimulus was needed
in the US economy, which pushed equity & commodity markets up.
Very contradictorily, the minutes suggested the
Fed’s appetite for further quantitative easing had waned.
However, the Fed and Bernanke have received much
criticism for the ultra loose monetary policies of
recent years and the ostensibly somewhat more hawkish stance may be an
attempt to position the Fed as being monetarily prudent and wishing to
protect the value of the US dollar.
Prudent investors will rightly remain skeptical and
will as ever judge the Fed by its actions and the data rather than its words.
With interest rates remaining near zero and continuing
negative real interest rates, and these set to continue in 2012 and into
2013, monetary policy is set to remain extraordinarily accommodative.
Gold’s bull market will almost certainly continue
as long as we have negative real interest rates (see chart below).
Tops in Gold Prices Mostly Associated with Rising Real
Interest Rates - (Bloomberg)
Gold’s price peak in 1980 came about when US 10
year bonds were yielding over 12% and with rising real interest rates. Today
the US 10 year is yielding a historically low and negligible 2.26%.
Real rates are have risen marginally but levels below
2% have been supportive of rising gold prices.
Gold price per troy ounce in USD - (Wikipedia)
The degree of monetary debasement seen in recent years
means that gold’s inflation adjusted high of $2,400/oz
remains a very viable price target.
Indeed, the scale of the European and coming US debt
crisis and the real risk of currency devaluations makes
$2,400/oz a conservative price target in the long
term.
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OTHER NEWS
(Bloomberg) -- Cocoa, Sugar Lead Slump as Gas Rebounds:
Commodities at Close
The
Standard & Poor’s GSCI gauge of 24 commodities fell 0.2 percent to
698.74 at 5:12 p.m. in London. The UBS Bloomberg CMCI index of 26 raw
materials was down 0.2 percent at 1,622.201. In the GSCI, corn was up the
most, at 1.1 percent, and cocoa was down the most, at 2 percent.
GRAINS, OILSEEDS
Corn rose, heading for the biggest three-session rally
since May, as demand for immediate supplies climbed after inventories fell to
an eight-year low in the U.S., the world’s top exporter. Soybeans
gained to a six-month high.
Corn futures for May delivery rose 1.2 percent to $6.63
a bushel on the Chicago Board of Trade. A close at that price would mark a
three-day rally of 9.8 percent, the most since mid- May.
Soybean futures for May delivery climbed 0.4 percent to
$14.27 a bushel. Earlier, the price reached $14.3425, the highest for a
most-active contract since Sept. 7.
BASE METALS
Copper dropped for the first time in four sessions in
New York as increasing inventories of the metal cast doubt on the outlook for
demand.
Copper futures for May delivery fell 0.1 percent to
$3.9185 a pound on the Comex in New York. The metal
climbed 3.4 percent in the previous three sessions on gains in U.S. and
Chinese manufacturing. Prices increased 11 percent in the first quarter, the
most since 2010.
On the LME, copper for delivery in three months slid
0.2 percent to $8,620 a ton ($3.91 a pound). Markets in China, the biggest
global user, are shut today.
Tin and aluminum declined in London. Nickel, lead, and
zinc advanced.
NATURAL GAS
Natural gas gained for a second day in New York on
forecasts for cold Midwest weather next week that may boost heating-fuel
demand.
Natural gas for May delivery rose 3.6 cents, or 1.7
percent, to $2.188 per million British thermal units on the New York
Mercantile Exchange. The futures have slipped 27 percent this year, the worst
performer on the Standard & Poor’s GSCI Index of 24 commodities.
U.K. natural gas for May was little changed amid ample
supplies of the heating fuel and lower-than-normal demand even as exports to
Belgium increased. Day-ahead power was stable.
The May contract was at 59.7 pence a therm, according to broker data compiled by Bloomberg.
That’s equal to $9.57 a million British thermal units. A therm is 100,000 Btu.
CRUDE OIL
Oil pared losses in New York as U.S. stocks rebounded
from today’s lows and gasoline prices gained.
Oil for May delivery fell 59 cents to $104.64 a barrel
on the New York Mercantile Exchange. It climbed 2.1 percent yesterday, the
most since Feb. 21, after U.S. manufacturing in March expanded at a faster
pace than estimated. Oil is 5.9 percent higher this year.
Brent crude for May settlement slid 21 cents to $125.22
a barrel on the London-based ICE Futures Europe exchange. The European
benchmark contract’s premium to New York-traded West Texas Intermediate
was at $20.58, widening from $20.20 yesterday, the biggest spread since
October.
SOFT COMMODITIES
Cocoa futures fell, heading for the longest slump this
year, on signs of ample supplies amid slowing demand. Sugar and coffee also
slid.
Cocoa futures for May delivery declined 2 percent to
$2,171 a metric ton in New York, heading for a fifth consecutive drop, the longest slide since the period ended Dec. 29.
The price tumbled 7.2 percent in the previous four sessions.
Raw-sugar futures for July delivery fell 1.4 percent to
23.44 cents a pound in New York. The sweetener dropped 0.2 percent yesterday.
Arabica-coffee futures for May delivery retreated 1.3
percent to $1.8375 a pound on ICE. The price jumped 5.5 percent in the
previous two sessions.
In London futures trading, cocoa, refined sugar and robusta coffee slid on NYSE Liffe.
PRECIOUS METALS
Gold dropped for the first time in three sessions in
New York on concern that physical purchases are declining and as a rise in
the dollar reduces the appeal of the metal as an alternative asset.
Gold futures for June delivery fell 0.2 percent to
$1,676.30 an ounce on the Comex in New York. The
metal rose 1.5 percent in the past two sessions. Before today, prices were up
7.2 percent this year.
Silver futures for May delivery slid 0.3 percent to
$32.995 an ounce, the first decline in four sessions. Before today, silver
increased 18 percent this year, the best-performing metal on the Standard
& Poor’s Spot GSCI Index of 24 commodities.
(Bloomberg) -- Jewelers in India Strike for 19th-Day
Against Higher Gold Taxes
Jewelers
in India, the world’s biggest bullion buyer, extended the longest ever shutdown for a 19th-day protesting against a 1 percent
excise duty on non- branded gold ornaments, a trade group said.
Jewelry associations are meeting in Mumbai today to
decide on future courses of action, Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, said by phone today. The
industry is demanding the excise tax be withdrawn.
(Bloomberg) -- India Q1 Gold Imports Seen 40-50% Lower
After Jewelery Strike
Gold
imports by India, the world’s biggest bullion buyer, may plunge as much
as 50 percent in the first quarter after a build up
in inventories during a nationwide strike, said Ajay Mitra,
managing director, Middle East and India, with the World Gold Council.
“We are still calibrating numbers. It will be in
the vicinity of 40 percent to 50 percent lower,” he said today in a
phone interview. “Based on discussions I’ve had with different
bullion banks and importing agencies, the sense I get is about 40-50 percent
below last year’s import numbers by these agencies.”
NEWS
Bloomberg
Gold Extends Drop as Fed Shunning Stimulus Helps
Dollar
Reuters
Gold extends losses as US stimulus hopes fade
Reuters
Global markets: Shares, euro fall as fresh Fed stimulus
hopes fade
The Financial Times
Bullion price hits UK precious jewellery
COMMENTARY
King World News
Jim Sinclair - Fed Minutes, Gold Manipulation &
Fool’s Play
Zero Hedge
You Ain't Seen Nothing Yet
Financial Sense
The Problem with the Fed’s Zero Rate Policy
Business Insider
Why Living In The American Empire Isn't All That
It's Cracked Up To Be
Dollar Collapse
We Owe How Much??
Mark
O’Byrne
Goldcore
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