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Today's AM fix was USD 1,603.50, EUR 1,306.74, and GBP
1,021.34 per ounce.
Yesterday’s AM fix was USD 1,594.75, EUR 1,293.60 and GBP 1,016.74 per
ounce.
Silver is trading at $27.91/oz,
€22.81/oz and £17.85/oz. Platinum is
trading at $1,401.00/oz, palladium at $574.40/oz and rhodium at $1,075/oz.
Gold rose $4.50 or 0.28% in New York yesterday and
closed at $1,604.10/oz. Silver edged off and recovered to a high of $27.99
and finished with a gain of 0.07%.
Gold is floating in a tight range at $1,600/oz today and gold continues consolidating at this level.
The macroeconomic backdrop remains highly supportive
with the Eurozone debt crisis far from resolved and the risk of debt crisis
in Japan, the UK, India, China and the U.S. in the coming months.
US data reported yesterday clouded any certainty over
the US need for imminent quantitative easing. However it is certain that the
hawks and doves will have much to discuss at the upcoming Jackson Hole
Economic Policy Symposium at the end of the month.
The World Gold Council released its quarterly report
today, Q2 2012 Gold Demand Trends Report and can be read in full on the World
Gold Council website here.
Accumulation of gold bullion from central banks was the
bright spot in demand last quarter, as total demand fell 7% globally, which
was driven by a 38% fall in consumer demand from India.
Price sensitive Indians have been shunning gold and
many have been opting for far cheaper poor man’s gold – silver.
Jewellery and investment demand both fell. Jewellery consumption was down 72.3 tonnes
at 418.3 tonnes, while investment fell 88.3 tonnes to 302 tonnes.
The report shows how while record levels of demand from
western markets, China and particularly India have been followed by a decline
– the seismic shift that is central banks going from being bet sellers to net buyers has provided a new fundamental
pillar of support for the gold market.
Physical demand slowed down in western markets and
especially in India in recent months but large buyers continue to accumulate
- both hedge funds and central banks and this is providing fundamental
support to gold above the $1500 to $1,600/oz level.
2Q total central bank gold purchases were double the
level reported a year ago as emerging market sovereign nations sought to
diversify away from the dollar and euro and heightened economic insecurity.
Gold purchases among central banks hit its highest
quarterly levels (157.5 metric tons) since the sector became a net buyer of
the yellow metal in 2Q 2009.
The official sector which comprises central banks and
other official institutions had by comparison bought 66.2 tons in 2Q 2011.
If central banks continued to purchase gold at the
current rate the official sector gold take would total nearly 500 tons this year,
topping the 458 tons purchased in 2011 by the sector.
Cross Currency Table – (Bloomberg)
Central banks have become net buyers of the yellow
metal increasing their reserves as a hedge against the sovereign debt crises
affecting the euro and dollar. Prior to 2009, central banks had been net
sellers of gold bullion for nearly 20 years.
Central banks of Russia, Saudi Arabia, Mexico, Turkey,
Kazakhstan, Thailand, Ukraine and the Philippines have been recently active
buyers of gold.
Kazakhstan's central bank purchased gold for its 7th
month in a row this June, rapidly growing its reserves which are now 1
million troy ounces higher than last year, according to International
Monetary Fund data.
There is the potential of greater demand from
unreported purchases by the People's Bank of China - should they decide to
again report an increase in their gold holdings.
The global banking, financial and monetary system is,
to put it frankly, a mess and will take years to rectify - in the meantime
gold looks set to continue gradually eking out safe haven gains.
Global gold demand is back at levels seen in 2009 which
shows that the assertion that there is a gold bubble mania with ‘Joe
and Jane public’, the investment and non investment
world “piling into” gold is far from the case.
Gold Prices/Rates/Fixes /Volumes – (Bloomberg)
As a percentage of pension and investment portfolios
and of central bank currency reserves gold allocations remain miniscule from
a historical basis and miniscule when compared to allocations to more risky
equities and bonds.
This suggests that the gradual increase in demand and
then slight decline in demand since Q3 2011 is nothing more than then ebb and
flow and is sustainable. There is a possibility that the gradual increase in
demand in the coming years could give way to a more substantial increase in
demand in the future.
Given the appalling fiscal and monetary backdrop,
demand for gold, particularly from investors and store of wealth buyers will
likely increase significantly in the coming years – as gold gradually
goes from a its status as a fringe investment back to being a mainstream
asset common in all investment portfolios and owned by the majority of
investors and savers.
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
NEWS
Gold holds above $1,600/oz
as stimulus hopes persist - Reuters
Central Bank Gold Demand Doubles in 2Q
– Fox Business
Low volumes, central bank wait-and-see depresses
Europe stocks - Reuters
Crude At Three-Month High; Gold Declines
- Bloomberg
COMMENTARY
Video: Gold Prices, Demand Seen to Increase in
Second Half - Bloomberg
Video: Soros and Paulson on Track as Gold May Top
$2,000 - Bloomberg
Eat Big Breakfasts Without Cashing Out On Gold
– The Financial Times
41 Years After The Death Of The Gold Standard -
"How We Ended Up In This Economic Purgatory" –
Zero Hedge
Mark
O’Byrne
Goldcore
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