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U.S. DOLLAR gold prices fell below $1550 an ounce Friday
morning, though they remained above last week's low, as stocks and
commodities also fell and the Dollar strengthened, with Eurozone finance
ministers set to discuss Cyprus, Ireland and Portugal today.
"Current momentum favors a test to the
downside," say technical analysts at Scotia Mocatta,
"but we would not expect significant liquidation until a break of $1500."
Analysts at Barclays Capital meantime say gold
should hit support around last week's low of $1540 an ounce, but ad that
there is tough resistance around $1590.
"It's a thin market," one dealer in
Singapore told newswire Reuters this morning.
"Buying is not exceptionally high from India. I
would say there isn't anything unusual yet."
Gold in Sterling meantime fell to its lowest level
this year on the spot market at £1006 an ounce, only just above its
December low and close to its lowest level since July last year.
Gold in Euros dropped to €1185 an ounce, a
two-month low and nearly 15% off its all-time high set last September.
Heading into the weekend, the Dollar gold price
looked set for its third straight weekly drop, down 2% on where it closed
last Friday, the steepest drop since February.
Silver meantime fell back below $27.50 an ounce,
though it remained slightly up on the week by Friday lunchtime in London.
On the currency markets, the Euro fell against the
Dollar this morning, handing back all of yesterday's gains, amid fears that
Cyprus's bailout may not be large enough.
Germany's government said Friday that the €10
billion figure for bailing out Cyprus is "not up for negotiation"
following news that the country needs to find €23 billion to meet its
financing needs over the next three years.
"We cannot do any more," agreed Luxembourg
finance minister Luc Frieden, attending today's Eurogroup meeting of single currency finance ministers.
Eurogroup president Jeroen Dijsselbloem meantime said he was "very optimistic
about helping Portugal and Ireland," adding that an agreement will
"hopefully" be reached to extend loans to those countries by seven
years.
Dijsselbloem denied that the subject of bad loans in Slovenia's
banking sector was due to be discussed at the meeting.
Elsewhere in Europe, British prime minister David
Cameron traveled to Berlin Friday to discuss European Union reform with
German chancellor Angela Merkel.
The Bank of Japan meantime has taken "all
necessary steps to achieve [its] 2% inflation [target] in two years," BoJ governor Haruhiko Kuroda said Friday.
"But it's not appropriate to limit our policy
to two years...we will not hesitate to adjust policy in the future as the economy
is like a living thing."
The BoJ's promise last
week to spend $1.4 trillion of newly-created money on various assets
"does not appear to have been bullish for Japanese gold demand"
says a note from Credit Suisse this morning.
"Record prices of gold in yen have seen a
marked increase in sales of both bars and scrap as investors realize
gains...the BoJ's efforts to displace Yen from JGBs
[Japanese Government Bonds] and into other avenues are likely to exaggerate
the global hunt for yield and real returns by Japanese individuals and
institutions...we think it more likely that will be reflected in rising
equity prices and falling bond yields abroad than in accelerating gold demand
domestically."
The Tokyo Stock Exchange suspended JGB futures
trading Fridays following a sharp drop in prices.
Ben Traynor
Editor of Gold News, the analysis and investment
research site from world-leading gold ownership service BullionVault,
Ben
Traynor was formerly editor of the Fleet Street
Letter, the UK's longest-running investment letter. A Cambridge
economics graduate, he is a professional writer and editor with a specialist
interest in monetary economics. Ben can be found on Google+
(c) BullionVault 2013
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