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Gold’s London AM fix this morning was USD
1,590.25, EUR 1,245.20, and GBP 1,005.34 per ounce. Friday's AM fix was USD
1,588.00, EUR 1,251.08 and GBP 1,005.13 per ounce.
Silver is trading at $28.45/oz,
€22.37/oz and £18.06/oz. Platinum is
trading at $1,470.50/oz, palladium at $616.00/oz and rhodium at $1,325/oz.
Gold rose $17.70 or 1.12% in New York on Friday and
closed at $1,591.40/oz. Gold has been trading up and down in Asia within a
narrow 8 point range and is now trading in Europe near $1,592.16 at 1150 GMT.
The Canadian markets are closed today for Victoria Day.
9-11 Silver Medal
produced at US Mint next to Military Academy at WestPoint, NY.
Gold edged up in line with the euro as G8 leaders
pledged to keep Greece in the eurozone.
Investors remain cautious as the world leaders had no
specific plan declared for Greece, who will face new elections next month.
Leftist leader, Alexis Tsipras said he would meet
with other EU leaders and negotiate new terms to keep Greece in the eurozone if he was elected.
ETF holdings bounced back from the 3 ½ month low
hit last Thursday to 69.884 million ounces on Friday. ETFs hit an all time high in March when they were at 70.89 million
ounces.
There are few a factors that have led to gold falling
in price in recent weeks despite the worsening Eurozone debt crisis and
deteriorating economic data from the US and elsewhere.
Gold Has Fallen Due To
• Gold’s recent weakness is in large part
due to a period of recent dollar strength. While gold in dollar terms has
fallen by 25% ($1,920 to $1,540), gold in euro terms is only down by 14%
(from €1,374/oz to €1,210/oz).
• Oil weakness – since the end of February,
oil has fallen from $111 a barrel to below $95 a barrel (NYMEX) today. Gold
and oil are often correlated and many buy gold to hedge inflation that comes
from higher oil prices.
• Gold’s weakness may also have been due to
wholesale liquidation in all risk markets due another bout of "risk
off" which has seen global equities and commodities all come under pressure.
• Physical demand from retail investors in the
western world has slowed down as did demand from India in recent weeks due to
the increase in taxes on bullion (since removed).
• Much of the selling has been technical in
nature – whereby more speculative elements on the COMEX who trade gold
on a proprietary basis have been selling gold due to the recent price
weakness and the short term trend clearly being down. This has led to
speculative longs now having their smallest positions since December 2008.
Gold’s Outlook Remains Positive Due To
• Central bank demand remains robust and central
banks are set to be net buyers of gold again in 2012.
• Demand for physical gold remains robust in much
of the Middle East, Asia and the Far East with strong demand seen in
particular in Turkey (for Middle East) and in Hong Kong (for China).
• Continuing zero percent interest policies in
major developed economies and negative real interest rates remain the primary
driver of the gold market. As long as there are negative real interest rates
in the US and in most western economies, gold is likely to continue to rise
in value.
• The problems in the Eurozone are far from
resolved and the short term panacea policy ‘solutions’ of recent
months have almost certainly made matters worse and increased the risk of
contagion in the Eurozone whereby periphery nations are forced to revert to
national currencies or the euro itself is devalued and debased.
Conclusion
GoldCore continues to believe that gold may rise to the
inflation adjusted high of $2,400/oz in the coming
years. Given the risk of contagion and currency devaluations in the Eurozone,
euro gold should rise to above €2,000/oz in
2013.
Gold remains an essential diversification and those who
have a 10% allocation to gold bullion will be rewarded again in the coming
months as macroeconomic, monetary and systemic risk is likely to become
elevated again.
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NEWS
Shares, euro steady but Greek worries weigh
- Reuters
Gold gains on steady euro; Europe concerns stay
- Reuters
Gold Extends Advance As Wen Comment Boosts Stocks
- Bloomberg
COMMENTARY
Sprott sees great things for gold and silver
- Mineweb
Gold bushwhacked the bears last week. It’s
even got gold bugs talking about gold stocks … again. - MarketWatch
Gold edges higher as dollar softens -
MarketWatch
Mark
O’Byrne
Goldcore
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