Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Gold Uptrend "Could See Significant Damage", Recent Falls "Largely Down to Futures Trade

IMG Auteur
 
Published : February 25th, 2013
882 words - Reading time : 2 - 3 minutes
( 1 vote, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

London Gold Market Report

U.S. DOLLAR gold prices climbed back above $1590 an ounce Monday morning, extending gains from Friday following sharp losses last week, while stock markets also rallied, although the FTSE 100 in London saw smaller gains that other European indexes following news of a downgrade to Britain's credit rating.

"Support [for gold] sits at $1522, the low from December 2011," says the latest technical analysis from Scotia Mocatta.

"A break of that level will do significant damage to the long-term uptrend."

Last week's gold price fall was "largely due to the futures market", according to one analyst.

The gross short position held by speculative traders in gold futures and options on the Comex has neared or exceeded 60,000 contracts only five times before in the last eight years. On these occasions the average six-month change in the gold price, according to analysis by BullionVault today, has then been a gain of more than 28%.

Silver meantime climbed back above $29 an ounce Monday morning, as other industrial commodities also gained and US Treasuries fell. 

On the currency markets the Pound fell to its lowest level since July 2010 against the Dollar this morning, dropping more than 1% from Friday's close before recovering some ground as the morning went on, as markets reacted to ratings agency Moody's decision late Friday to strip the UK of its Aaa credit rating.

"The downgrade was expected and priced into credit markets," says a note from Morgan Stanley.

"Hence, we expect only a limited currency response in the short term."

The Sterling gold price ticked back above £1050 an ounce for the first time in just over a week this morning.

The Yen meantime fell to a 33-month low against the Dollar at the start of Monday's Asian trading, following reports that Japan's government is set to nominate Asian Development Bank president Haruhiko Kuroda as governor of the Bank of Japan.

"Kuroda is a fan of a weaker Yen and of deflation bashing," explains Societe Generale strategist Kit Juckes in London.

The government is also reported to be planning to nominate university professor Kikuo Iwata as one of Kuroda's deputies.

"Perhaps thanks to the inclusion of Iwata the market will expect more eye-catching bold easing measures," says Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo.

The world's biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) saw a further 9.6 tonnes in outflows Friday. Over the whole of last week, the volume of gold held to back GLD shares fell 3.2% to 1280.7 tonnes. 

The world's biggest silver ETF iShares Silver Trust (ticker: SLV) by contrast saw its bullion holdings grow by 0.8% to 10,602.8 tonnes.

The amount of gold held by all exchange traded funds tracked by Bloomberg saw its biggest weekly drop since August 2011 last week, falling to a five-month low of just over 2560 tonnes.

"Market participants appear cautious after last week's sharp sell-off," says Nick Trevethan, senior commodities strategist at ANZ.

"While we have downgraded our near-term views, gold prices should accelerate in the second half [of 2013] on improving demand from India and China."

Indian gold industry insiders will be watching for any further measures aimed at reducing bullion imports in this Thursday's budget, after India hiked import duties on gold to 6% last month.

"Suppose you take the worst case scenario and the government completely bans the import of gold.

Do you think that Indian people would stop buying gold?" asks Prithviraj Kothari, director at

Riddhi Sidhi Bullions in Mumbai, adding that such a move would increase demand for smuggled gold.

India is traditionally the world's biggest gold buying nation, a position it held in 2012 according to the most recent World Gold Council data, and has to rely heavily on imports, which contribute to its trade deficit. 

A report published by India's central bank earlier this month suggests encouraging people to invest in gold-linked financial products rather than buy gold outright as one of way of reducing the reliance on gold imports. Seeking to increase the amount of gold people deposit with banks was another proposal.

"The government should come out with a voluntary gold deposit program where it won’t ask any questions about the source of gold, and offer an annual interest rate to depositors," suggests Bachhraj Bamalwa, president of the All India Gems & Jewellery Federation.

Kazakhstan and Russia meantime both added to their gold reserves last month for the fourth month running, according to International Monetary Fund data, while Azerbaijan bought gold for the first time in a decade.

Monday sees the second day of voting in Italy's general election, with newswire Reuters reporting a "surge in protest votes" for parties such as the Five Star Movement led by comedian Beppe Grillo.

"There are similarities between the Italian elections and last year's ones in Greece, in that pro-euro parties are losing ground in favor of populist forces," says Riccardo Barbieri, chief economist at Mizuho International in London.

"An angry and confused public opinion does not see the benefits of fiscal austerity and does not trust established political parties."

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


Companies Mentionned : Bullion | Generale | Reliance |
Data and Statistics for these countries : Azerbaijan | China | Greece | India | Italy | Japan | Kazakhstan | Russia | All
Gold and Silver Prices for these countries : Azerbaijan | China | Greece | India | Italy | Japan | Kazakhstan | Russia | All
<< Previous article
Rate :Average :5 (1 vote)
>> Next article
The London Gold Market Report is the daily market review from BullionVault, the world's largest physical gold and silver market for private investors. A full member of professional trade body the London Bullion Market Association, BullionVault publishes the LGMR every day that the market is open, bringing you insider comment and analysis from the very center of the world's $240 billion-a-day physical gold trade, and putting the latest gold price action into its wider financial and economic context. Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The Way Out
31 MarGypsy1
James, you're wrong to think the people on earth couldn't THRIVE ~ live well, eat well, enjoy great lives, advance mankind ~ with the resources we ...
Time to Eliminate Pilots in Airc...
30 MarShadowdoo1
Hi Mish, Sorry pal, I would rather take the door off than give the controls to some moron on the ground. Especially with that nitwit in t...
Gold: April 2015 Update
30 Marovertheedge
"I have been invited to speak at the Mines & Money Mauritius Conference in June 2015 again. If you would like to join you can receive 25% off your ...
Greece Needs the Magic Formula t...
30 Marovertheedge
Wow dude. "Idiocracy" is obviously not just another dumb-ass movie. I admit that I should have recognized your devotion to Brawndo (it has ...
Signs that America Will Hit the ...
30 MarFalconflight
I'll tell you what signals a return of the Dark Ages....the growing, almost hysterical screed again in the West that those Jews are responsible for...
Misunderstanding "Peak Gold"; Go...
29 MarTed S.1
Hi Mish, You make a good point about the difference between commodities and gold. It's a great point of discussion to counter people who ar...
The Finanser Interviews Jon Matonis
29 Marovertheedge
"In late 2009, I got introduced to Bitcoin by a random email from Satoshi Nakamoto. I didn’t give it much thought at the time and then 3-4 months ...
Gold Effect on Mining & Shale Wa...
28 Marneville1
Thank you Jim Willie for your open and candid report on some of the most urgent matters agrevating this economically and war torn world thanks...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Bankers Petroleum(Oil)BNK.TO
to Release First Quarter Operational Update and Hold Conference Call April 7, 2015
CA$ 2.71-1.09%Trend Power :
Corporate news
Aurico(Au-Ag)AUQ.TO
Announces Details for First Quarter Results and Annual General Meeting
CA$ 3.50-2.78%Trend Power :
Financials
Erdene(Au-Cu-Mo)ERD.TO
Reports Initial Resource Estimate for Altan Nar Gold-Polymetallic Project
CA$ 0.12+19.05%Trend Power :
Corporate news
Paladin Energy Ltd(Au-Cu-Pa)PDN.AX
Announces Closing of US$150M of 7.00% Convertible Bonds Due 2020
AU$ 0.38+1.33%Trend Power :
Corporate news
Impact Silver(Ag-Au-Cu)IPT.V
Reports Additional Wide & High Grade Drill Intercepts at San Ramon Deeps; Expands Scope of Mi
CA$ 0.18-2.63%Trend Power :
Corporate news
Perlite CanadaPCI.V
Announces its Results for for the First Quarter of 2015
CA$ 0.18+0.00%Trend Power :
Financials
Dundee Precious Metals(Ag-Au-Cu)DPM.TO
Announces Reserve and Resource Update for 2015
CA$ 2.72+1.49%Trend Power :
Corporate news
Typhoon Expl.(Au-Gems-Ur)TYP.V
Acquires Two New Properties
CA$ 0.06+0.00%Trend Power :
Corporate news
Silver Bear Res.(Ag-Au-Le)SBR.TO
Announces the Filing of its Financial Results for the Year Ended December 31, 2014
CA$ 0.04+12.50%Trend Power :
Financials
Chesapeake Gold(Ag-Au-Cu)CKG.V
Announces New Water Source Strategy For Metates; Updated Pre-Feasibility Study To Be Released
CA$ 2.14+0.00%Trend Power :
Corporate news
Comments closed
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.