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Gold’s London AM fix this morning was USD
1,642.50, EUR 1,251.24, and GBP 1,015.90 per ounce.
Yesterday's AM fix was USD 1,652.50, EUR 1,257.71 and
GBP 1,020.44 per ounce.
Silver is trading at $30.49/oz,
€23.31/oz and £18.92/oz. Platinum is
trading at $1,559.00/oz, palladium at $661.90/oz and rhodium at $1,350/oz.
Gold fell $8.10 or 0.49% in New York yesterday and
closed at $1,653.60/oz. Gold has been slowly falling off in Asian and early
European trading where it is down some $10 on the New York close.
Gold has been under pressure in Asia and Europe despite
very disappointing economic data further igniting concerns about global
growth and the debt crisis.
Cross Currency Table – (Bloomberg)
Gold continues to trade in a range between $1,600/oz and $1,700/oz. Support for gold is at $1,624/oz and resistance is at $1,670/oz
and $1,680/oz (see chart below).
Technically, the narrowing range would suggest that a
close below or above these levels could see a sharp follow through move down
or up. Fundamental demand especially from central banks such as Russia (see
below) and from store of wealth buyers in the Middle East and Asia mean that
any decline will likely be shallow and the likelihood is of a break out to
the upside.
Investors await the European Central Bank decision at
2.30pm CET. Market watchers will take interest in the ECB President and
Vice-President’s explanation of the Governing Council's monetary policy
decisions and answers to journalists' questions.
Continuing ultra loose
monetary policies and negative real interest rates in the Eurozone mean that
the euro (€1,251/oz) will continue to decline
against gold.
European investors and savers need to protect
themselves from the risk of euro and currency devaluations by having an
allocation to gold.
Gold 6 Month Chart – (Bloomberg)
The dollar’s recent strength remains primarily
because worries about the eurozone financial crisis
have been become paramount which is limiting concerns about the US recovery
– for now. The stronger dollar is weighing on commodities and may be
impacting on the precious metals as well.
While gold has been correlated with riskier assets such
as equities in recent weeks, it remains a safe haven asset and currency and
further financial, economic and geopolitical uncertainty will support gold.
Swiss Gold Stored Internationally – SNB Will Not
Disclose Where
There are
increasing calls in Switzerland for transparency regarding the location of
the remaining Swiss gold reserves. The Swiss National Bank said overnight
that it keeps its gold in “decentralized” locations, according to
Walter Meier, a spokesman for the Swiss central bank as reported by
Bloomberg.
The SNB has also sold a large part of the Swiss gold
reserves in recent years.
There are deepening concerns in Switzerland about the
debasement of the Swiss franc. The SNB has pegged the franc to the euro and
is engaged in the same ultra loose monetary
policies as the Federal Reserve, BOE and the ECB. The SNB won't allow the
franc to rise above an arbitrary “ceiling” against the euro
Walter Meier himself said on April 5 that the SNB is ready to buy foreign currencies
in "unlimited quantities."
Meier’s comments regarding the vastly depleted
Swiss gold reserves came after Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, called on the SNB to disclose
where its gold is stored, in a letter published in the respected Swiss
publication Finanz und Wirtschaft.
Meier said that the SNB holds its physical gold
reserves “domestically and internationally, with provisions for a
crisis scenario being a main factor in the decision for this decentralized
storage”.
“The criteria for the storage countries are:
appropriate regional diversification, exceptionally stable economic and
political environments, immunity for central bank investments, access to a
gold market where stocks could be liquidated if necessary,” he
continued.
He concluded by saying that “such a decentralized
storage is still preferable to an exclusive storage in Switzerland. The
listed factors can change over time and that’s why the central bank is
reviewing and adapting the storage locations periodically.”
The SNB’s monetary policies have been imprudent
in recent years and their gold sales have lost the Swiss people a lot of
money.
Switzerland holds 1,040.1 metric tons of gold,
accounting for about 19% of its total reserves, according to the World Gold
Council. This is down from 2590 tonnes prior to the
SNB gold sales which began in 1999. The sale of Swiss gold reserves has cost
the Swiss people some $50 billon.
Swiss GDP was $523 billion in 2011 so the SNB has lost
some 10% of Swiss GDP from the sale of a large part of their national
patrimony – their vitally important gold reserves.
Many Swiss people are concerned that their remaining
gold reserves may be stored in foreign jurisdictions (possibly less safe than
Switzerland) which could nationalise or expropriate
their reserves in the event of some form of financial or economic collapse or
currency crisis.
Hence, increasing calls of transparency regarding the
locations of their gold and calls for the gold to be stored in Switzerland.
Russian Gold / FX Reserves Rise To 523.3 Billion
Russia's
gold and foreign exchange reserves rose to $523.3 billion in the week to
April 27 from $519.5 billion a week earlier, central bank data showed on
Thursday.
The central bank provided the following figures (in
billion dollars):
Latest week 523.3
Previous week 519.5
End-2011 498.6
The reserves include monetary gold, special drawing
rights, reserve position at the IMF and foreign exchange.
Russia’s continues to diversify its reserves and
aggressively accumulate gold bullion.
Russia Gold Reserves In Millions of Ounces – IMF
via Bloomberg
As of 03/31/2012, Russia had increased its reserves to
28.7999 million ounces. Russia held 26.08 million ounces a year ago on
03/31/11. Therefore this is an increase of 10.43% in the last 12 months
alone.
The risk of geopolitical tensions spilling over into
currency wars remains high.
OTHER NEWS
(Reuters) - Turkish gold imports rose to 7.78 tonnes
in April from 2.91 tonnes in March,
according to data released by the Istanbul Gold Exchange on Wednesday.
In 2011 as a whole, imports amounted to 79.70 tonnes, almost doubling from 42.49 tonnes
a year earlier.
(Reuters Global Gold Forum) - CME notifies members of
its clearinghouse that starting Monday, members will need to
effectively double the initial margin collected for non-hedge trading
positions, with no exception for members' customer accounts. The move is
required by CFTC as part of Dodd-Frank, while market participants have known
about it for some time, CME apologized Wednesday for the "short
notice" of the change. As per CFTC rules, hedges must reduce risk for
commercial users of derivatives markets, linked to such a company's assets or
liabilities.
(PTI) -- ING Vysya Bank
enters gold coin retailing
Private
sector lender ING Vysya Bank today entered the gold
coin retailing segment, announcing its plans to sell 24-carat coins of up to
10 grams.
The coins will be imported from Switzerland and be sold
at the Bangalore-headquartered bank's 149 branches nationally, it said in a
statement issued here.
The coins will be offered in denominations of five
grams, 8 grams and 10 grams and will be sold based on international bullion
rates, it said.
Outlining the bank's rationale for entering the fray,
which already has a majority of lenders operating, the bank's country head
for retail banking Uday Sareen
said, "Gold as an asset class is a key alternate investment avenue for
individual investors and also acts as a natural hedge against other asset
classes. We have been seeing tremendous demand for this product."
India is the highest consumer of the yellow metal,
accounting for 20 percent of the world's market. According to the World Gold
Council, the country imported 966 tonnes of gold in
2011.
(Bloomberg) -- Open Interest for Palladium Options
Climbs to Record on May 1
Open
interest for palladium options traded on the New York Mercantile Exchange
climbed to a record 12,166 contracts yesterday, surpassing the previous
record of 11,816 on April 25, CME Group Inc. said in an e-mailed statement.
(Bloomberg) -- iShares Silver
Trust Holdings Dropped 14.6 Metric Tons Yesterday
Holdings
in the iShares Silver Trust dropped 14.61 metric
tons yesterday to 9,537.53 tons, according to data on the company’s
website.
For breaking news and commentary on financial markets
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NEWS
Gold Standard for All, From Nuts to Paul Krugman - Bloomberg
Gold under pressure from weak data; ECB eyed
- Reuters
Gold Slips In Asia; ECB Meeting, US Data Eyed
– Wall Street Journal
Gold, silver extend losses in Asian trade
- MarketWatch
Russian Gold / FX Reserves Rise To $523.3 bln - Reuters
COMMENTARY
Gold Bull's Long Term Trendline
- The Indispensable Chart – Jesse's Café Américain
Hugh Hendry On Europe "You Can't Make Up How
Bad It Is" – Zero Hedge
Preparing for a Lengthy and Unpredictable US Dollar
Crisis – The Daily Reckoning
Russell - A Chapter of the World Has Come to an End
– King World News
Brewing a Conflict with China –
Foreign Policy Journal
Mark
O’Byrne
Goldcore
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