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Gold’s London AM fix this morning was USD
1,655.50, EUR 1,261.33, and GBP 1,039.04 per ounce. Yesterday's AM fix was
USD 1,654.00, EUR 1,261.63 and GBP 1,040.25 per ounce.
Silver is trading at $31.56/oz,
€24.01/oz and £19.78/oz. Platinum is
trading at $1,583.75/oz, palladium at $637.50/oz and rhodium at $1,350/oz.
Cross Currency Table – (Bloomberg)
Gold fell $0.90 or 0.05% in New York yesterday and
closed at $1,658.10/oz. Gold has been trading sideways in Asian trading and
remains in a tight range in Europe this morning near $1,656.07/oz.
Gold remains supported this morning as the ECB signalled that it would intervene in the debt markets on
worries about Spain and the risk of contagion in the Eurozone. ECB board
member Benoit Coeure said “the European
Central Bank still has its bond-buying programme as
an option”.
Investors are also still concerned about other
peripheral Eurozone economies like Italy and how they might affect the core
Eurozone nations. Italy saw its 1 year borrowing costs rise for the first
time since November during its sale of short term bills yesterday, ahead of a
3 year bond auction later today.
The number two official at the US Fed, Yellen, said overnight that due to high unemployment
facing the economy, the Fed has left the door open to further Fed action
including QE.
Further QE and the continuation of ultra
loose monetary policies will be positive for gold.
IMF: Gold Is Scarce “Safe Asset” And
“Rising Demand for Safe Assets”
Further
confirmation of gold’s continuing but gradual renaissance as a safe
haven asset was given by the IMF yesterday who warned that a “growing
shortage of safe assets” poses a threat to “global financial
stability.”
The IMF identified $74.4 trillion of potentially safe
assets today, including gold, investment grade government and corporate debt,
and covered bonds.
Dow Jones Industrial Average Index in Gold USD
Sovereign debt crises are reducing the number of
governments that investors trust to issue "risk-free" bonds just as
new financial regulations are increasing demand for safe securities from
banks.
Importantly, the IMF’s latest Global Financial
Stability Report’s introduction finds that
"In the future there will be rising demand for
safe assets, but fewer of them will be available, increasing the price for
safety in global markets.”
“Both the lack of political will to reshape
fiscal policies at times of rising concern over debt sustainability and an
overly rapid reduction of fiscal deficits limit governments’ capacity
to produce assets with low credit risk.”
The IMF has warned regarding illiquidity in “safe
haven” markets. Gold remains one of the most liquid markets in the
world and the illiquidity in bond markets would see increased safe haven
demand for gold.
The IMF is warning regarding deteriorating public
finances. As many governments see themselves being
downgraded - safe haven bonds may become less safe.
This bodes well for gold in the coming years and should
see gold again be seen as a leading if not the ultimate safe haven asset.
Gold To Reach $2,000/oz
Within Year On QE, Inflation and Spain - GFMS
Gold may
climb to a record above $2,000 an ounce within the year as concerns about
sovereign debts and inflation lead to safe haven and inflation hedging demand
from investors, Thomson Reuters GFMS said.
While the near term may be “challenging”
because of concern about demand in the top physical markets, especially
India, the possibility of further quantitative easing will likely support
gold.
The price floor may be at or below $1,650 an ounce,
according to the report.
Gold 2 Year Chart- (Bloomberg)
“While short-term downside risks remain in place
for the gold price, the economic and financial background continues to point
to higher prices,” GFMS said. “It is too soon to dismiss the
possibility of further quantitative easing in either the United States or
Europe, and the Chinese government may yet ease its monetary policy.”
Global gold demand rose 0.6 percent last year as a jump
in central-bank buying offset a decline in fabrication, GFMS said. Central
banks boosted net purchases almost six fold to 455 tons last year, and may
buy about 100 tons each quarter in 2012 as emerging countries maintain a
similar rate of purchases and sales from Europe remain “tiny,”
according to the report.
Total investment fell 10 percent to 1,605 tons last
year, with bar demand climbing 37 percent to a record 1,209 tons, GFMS said.
China’s jewelry fabrication may rise to a new
high in 2012 after jumping 15 percent to a record 496 tons, according to
GFMS. Growth in China will be driven by the country’s economic
expansion, while exports will remain “moribund” due to a weak
global economy.
It is important to note that GFMS have been quite
bearish on gold in the long term in recent years.
Any positive outlook has usually been short term in
nature and tempered by warning that the price would “peak” in a
year or two or the near term. There is the risk that they are again
conservative and overly cautious.
South African Production Plummets Again
On the
supply side, South African gold production continues to plummet. South
African gold production fell 11.5% in February from a year earlier,
Juan-Pierre Terblanche, a spokesman for Statistics
South Africa told Bloomberg today.
For breaking news and commentary on financial markets
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NEWS
Gold 'to Hit $2000' on Spain Fears
– The Telegraph
Gold Could Climb to $2,000 Within A Year
– The Financial Times
Gold treads water; euro zone caution remains - Reuters
Physical gold demand strong: GFMS - MarketWatch
IMF: Growing shortage of safe assets such as Gold
– The Financial Times
Gold could peak in 2013 after 12-year bull run: GFMS
- Reuters
COMMENTARY
China Buying Gold? - MarketWatch
Europe's banks beached as ECB stimulus runs dry
– The Telegraph
Gold Rules - In Vietnam They Will Pay You To Store
Your Gold – Zero Hedge
How Serious are China and India About Their Gold?
– Fox Business
Buying The Dips In Gold Has Been The Right Move For
A Decade - Forbes
Mark
O’Byrne
Goldcore
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