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Gold’s London AM fix this morning was USD
1,590.00, EUR 1,228.37, and GBP 987.39 per ounce. Yesterday's AM fix was USD
1,585.50, EUR 1,221.87 and GBP 984.17 per ounce.
Silver is trading at $29.13/oz,
€22.60/oz and £18.15/oz. Platinum is
trading at $1,492.73/oz, palladium at $612.20/oz and rhodium at $1,300/oz.
Gold fell $15.80 or 0.98% in New York yesterday and
closed at $1,591.00/oz. Gold ticked higher in Asia but has drifted lower
since Europe opened. Support is at yesterday’s intraday low of
$1,580/oz.
Cross Currency Table – (Bloomberg)
Gold is relatively unchanged after 3 days of gradual
losses despite the degeneration in the Eurozone crisis with the deteriorating
situation in Greece and Spain increasing the risk of contagion.
The continuous short term panaceas of recent months
look set create an even bigger crisis – which will benefit gold in the
medium term.
Spain’s banking troubles could create the next
political and economic crisis in Europe. Spanish yields remain near 5 months
high (10 year at 6.07%) after Madrid took over the country's 4th biggest bank
Bankia in an effort to clean up its banking sector.
Greece’s political turmoil threatens their
solvency and risks an exit from the euro currency just months after Athens
secured the latest round of ‘bailouts’ from international
lenders.
While gold may go lower in the short term, it looks
oversold. The Relative Strength Index (RSI) on gold is just above 30 which shows that gold is oversold.
Demand in the west remains muted with little physical
coin and bar demand and ETF positions remaining largely flat - the total gold
ETF holdings are down -0.12 million ounces, month to date.
When gold experienced its ‘Bernanke fall’
of $80 on February 29, spec length was just above 27 million ounces. Today
the gold market longs are nearly 10 million ounces lower suggesting that the
worst of the sell off may be over.
The positive action of the gold miners yesterday may
also be indicative of a bottom – as the XAU and HUI were up 1.72% and
1.86% respectively.
Physical demand in Asia has picked up again with UBS
reporting that demand from India was “again nearly twice average daily
volumes”. Jewellers in India appear to be
starting to rebuild inventories after the removal of the excise tax.
The Shanghai Futures Exchange launched silver futures
trading earlier today. It generated a buzz and “massive interest”
amongst Chinese investors according to Reuters. Prices fell in line with
international markets.
The total trading volume on the eight contracts <0#SAG:> exceeded 300,000 lots. Thus, the one day old
silver contract is now already the second most active contract on the
Shanghai exchange after copper.
This bodes well for silver prices in the coming months
and in time the silver futures market on the Shanghai exchange will likely
rival that of COMEX with ramifications for the silver price.
Goldman Sees “Currency of Last Resort” Up
15 pc At $1,840/oz in 6 Months
Goldman Sachs has confirmed that it remains bullish on gold and believes that
gold will rally as the Euro crisis deepens and the US engages in more
stimulus.
Gold 1 Year Chart – (Bloomberg)
Goldman maintains “constructive” 6-month
forecast, says case for higher prices remains in place.
Goldman stands by its forecast for a rally in gold this
year, saying that the precious metal will advance to $1,840/oz over six months as the U.S. central bank embarks on a
third round of stimulus in June.
The precious metal remains the “currency of last
resort,” according to analysts led by Jeffrey Currie in a report
released yesterday.
Goldman’s gold forecast implies a 15% return in 6
months.
“In early 2009, we suggested that gold had become
the currency of last resort, overtaking the U.S. dollar’s status due
the rising risk of sovereign default and debasement concerns,” Currie
wrote in the report. Even as the U.S. currency advanced and gold fell on the
European crisis in recent months, “it is too early for the dollar to
reclaim this status,” they wrote.
“The case for higher gold prices remains in
place,” the analysts wrote. “U.S. economic and employment data
has now disappointed for several weeks, European election results point to
further stress in the euro area, while anecdotal data suggests that physical
gold demand remains resilient.”
OTHER NEWS
(Bloomberg) -- Silver Futures Start Trade in Shanghai for Producers,
Investors
Silver futures in China, the world’s second-biggest user, began trading
today amid expectations for demand from producers seeking to manage their
risks as well as investors aiming to protect their wealth.
The September-delivery contract, the most-active,
traded at 6,145 yuan per kilogram ($30.27 per
ounce) at 9:41 a.m. on the Shanghai Futures Exchange. It was priced to start
at 6,166 yuan, higher than silver’s close on
the Comex yesterday as the price incorporates
China’s 17 percent value-added tax on imports.
The exchange, China’s second-largest commodity
bourse by volume, aimed to help producers to hedge risks, Vice President Huo Ruirong said last week. The
metal doubles as an industrial component used in solar panels, electronics
and batteries as well as a protection of wealth that’s cheaper than
gold.
“As an industrial metal with currency
characteristics, silver will attract a lot of investor demand, especially
from retail investors,” said Wang Ying, analyst at Beijing Antaike Information Development Co. “This will
probably be bullish.”
Silver futures in New York tumbled to a four-month low
yesterday on increased concern that Europe’s debt crisis will escalate.
The July-delivery contract on the Comex traded
little changed at $29.235 an ounce.
Prices in New York may average $35.40 in the fourth
quarter, according to the median of 11 analyst estimates compiled by Bloomberg,
as the global economy recovers. Manufacturing in the U.S. and China grew in
April at close to the fastest rates in a year, increasing speculation that
the world’s biggest economies may withstand the fallout from the crisis
in Europe.
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
NEWS
Gold inches up; sentiment frail as Europe woes
persist - Reuters
Gold Rebounds as Slump to Four-Month Low Spurs
Investor Buying - Bloomberg
Euro Global Poll Shows More Than 50% Predicting an
Exit - Bloomberg
American Eagle silver bullion sales down 23.5% from
2011 - Coinworld
COMMENTARY
Debunking Popular Gold Myths –
True Economics
Sprott On Gold Market Manipulation & Why Silver Will
Outperform Gold - CNBC
Mining For Minerals On Asteroid –
Zero Hedge
Extraordinary delusions or the madness of machines
- GoldSeek
Leeb - We Will Now See a Gold Standard Imposed in Europe
– King World News
Mark
O’Byrne
Goldcore
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