London Gold Market Report
The PRICE of GOLD held onto most of yesterday's $15
jump at $1676 per ounce Thursday morning in London, ticking back as Asian and
European stock markets fell after Wednesday's surprise drop in US economic
Silver also eased back, but held at 1-week highs above $32 per ounce after
rising yesterday in gold's "slipstream" as one bullion-bank analyst
"This Friday's [non-farm US payroll] report remains crucial," says
a note from Swiss bank UBS
currently encouraging its institutional clients to buy gold
outright rather than as a credit-risk deposit.
"Some adjustments to [gold] positioning are likely to emerge" after
Wednesday's 'no change' decision from the US Federal Reserve on zero interest
rates and quantitative easing.
"But overall, the gold market should resume subdued trading," says
UBS, "as is typical ahead of a key event" such as the monthly jobs
Russia's foreign ministry meantime condemned a reported Israeli air-strike on
a military research unit inside Syria, saying Thursday that if confirmed this "unprovoked attack [would] blatantly
violate the UN Charter."
Shares in Italy's struggling Banca Monte dei Paschi di Siena founded in 1472 steadied as the Italian central bank weighed MPS's
second bail-out request in four years after it hid losses of 500 million on a 2008 derivatives deal.
German banking giant Deutsche Bank lost 2.2bn ($3.0bn) for the last 3 months of 2012, it
"A year ago, the mood in Europe was horrible and nobody could see how on
earth stocks could go up," says Gloom,
Boom & Doom author and money-manager Marc Faber, who urged CNBC anchor Maria Bartiromo
to buy gold earlier this week.
"Now since May 2012, less than a year ago, Portugal, Spain, Italy,
France, are up between 30 and 40% and Greece has doubled...!"
Factory-gate prices across France and Italy fell in December from November,
new data showed today.
House prices in the year to October fell 2.5% across the 17-nation Eurozone,
with Spain's home-price drop accelerating to 15.2%.
"For the first time in four years," Faber continued Wednesday,
pointing to the US stock market, "since the lows in March 2009, I love
this market. Because the higher it goes the more likely we will have a nice
crash, a big time crash.
"You are in great danger if you don't own any gold," Faber had
earlier told Bartiromo.
Near-term, reckons Deutsche Bank analyst Xiao Fu and despite Wednesday's $15 rise on poor US growth
data and the Federal Reserve's no-change decision on zero rates and QE "Gold lacks a convincing catalyst near term to
take it convincingly higher and instead remains susceptible to opportunistic
But "Any thought given to reining in some of the Fed's buying power will
now be shelved," counters Ed Meir in his daily note for INTL FCStone.
"[Wednesday's] GDP number clearly shows that the US economy is still far
from capable to muster its own momentum without key fiscal and monetary
"In the least, this should provide an element of support to the precious
metals group, at least over the short term."
After creating and spending first $1.4 trillion on mortgage and Treasury
bonds in 2008, and then a further $600 of T-bonds starting in 2010, the US
Fed will likely acquire a further $1.1 trillion of US government debt with
its current program of quantitative easing, according to a Bloomberg survey
"Given the sluggish [US] economy," says precious metals strategist Eugen Weinberg at Commerzbank, "it would be
premature to discuss [the Fed] abandoning the quantitative easing programme.
"Despite the noticeably higher risk appetite displayed by market players
of late, gold demand is thus unlikely to ebb away completely. On the
contrary, high sales of US gold coins in January,
and renewed inflows into the gold ETFs recently, point to relatively robust
demand for gold."
Over in India
most likely the world's #2 gold consumer market in 2012 behind China the economic affairs secretary contradicted the
finance minister yesterday over plans to raise gold import duties again, in a bid to curb
household appetite to buy gold, widely blamed for India's yawning trade
Two days after Palaniappan Chidambaram told the Financial Times that New
Delhi is considering "some other steps to moderate the import of
gold" further, Arvind Mayaram
told Reuters that "I don't think there is any plan as of now."
Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market
for private investors online, where you can buy gold and silver in Zurich,
Switzerland for just 0.5% commission.
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