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London Gold Market Report
The GOLD PRICE eased $5 per ounce from a 2-day
high in London trade Thursday morning, holding above $1676 as Asian stock
markets closed lower but Europe held flat.
The Euro currency held onto a half-cent rise as the European Central Bank
kept its key lending rate at a record low of 0.75% for the 15th month in a
row.
Crude oil rose with other commodities, but silver bullion remained unchanged
for the week so far at $31.80 per ounce.
Daily swings in the silver price haven't been as small as this week since
spring 2007. Volatility in the US Dollar gold price has only been lower than
yesterday on 15 days since mid-2005.
"The story in the precious metals market," says Commerzbank's
commodities team, "continues to be the explosion in the price of
platinum" now
13% higher since the start of the year.
Palladium, which is also used primarily in the auto industry, is similarly
"in a very bullish trend," they add, while "Gold and silver
remain range-bound."
Technical analyst Russell Browne at bullion bank Scotia Mocatta calls the
gold price "trapped" for the last month.
While the market may be "building a base" from which to rise
higher, "We do not expect any speculative buying until the market can
break 1695," he adds, "a level which has held since
mid-December."
Commodity analysts at the World Bank forecast a 4% drop in the gold price by
end-December, with a further 3% fall to $1550 over 2014.
"Most risks are on the downside," says the World Bank's latest
Commodity Market Outlook, "as the pace of global recovery improves,
including further easing of financial tensions in Europe."
The recent "high gold prices have [also] attracted considerable
investment in the gold mining industry," the report adds, "not only
to replace aging existing mines but also to develop new mines."
China's gold mining output rose in 2012 for the 6th year, Shanghai Securities
News said today, confirming its world #1 position with a record 403 tonnes.
Together with China's gold imports through Hong Kong of 524 tonnes (net of
exports), that figure takes China's domestic demand for last year to at least
926 tonnes.
Imports to India the
world's #1 consumer nation until 2012, but with no domestic mine output fell one-third by value over the first 9 months of
last year, perhaps taking full-year shipments below 650 tonnes.
"[The gold] market is slow these days," Reuters quotes a Mumbai
bank dealer, "as overall sentiments are not so good because of [central
bank] comments."
After gold import duties were hiked to 6% last month, the Reserve Bank of
India on Wednesday proposed strict controls on import quantities, perhaps
forcing wholesalers to re-export certain quantities and use recycled domestic
metal instead, to try and cut the country's large trade deficit.
"If they come up with quota system," says the dealer quoted by
Reuters, "then market will become very ugly."
The Rupee slipped back Thursday against the Dollar, but remained 5% above
last month's multi-decade lows.
Sterling meantime whipped violently as first Mark Carney who takes over as governor at the Bank of England this
summer
spoke before lawmakers in London, and then the central bank held UK interest
rates at 0.5% for the 48th month in succession.
"[Economic] risks are weighted to the downside..[but] inflation is
likely to rise and may remain above the 2% target for the next two
years," the Bank said as it also maintained its quantitative easing at
£375 billion ($590bn).
It will now start recycling the cash from maturing government bonds, it said,
into new purchases of public debt.
"Returns to QE have declined, particularly in the US, as the scale of
programme has increased," said Mark Carney, currently head at the Bank
of Canada, to the Treasury Select Committee this morning.
But "unquestionably" the UK economy's "considerable
slack...will be a situation that merits considerable monetary policy
stimulus," when he takes over from Sir Mervyn King in June.
The gold price for UK savers today touched a 10-week high above £1073 per
ounce.
It has risen more than 5-fold since King moved from deputy to governor in June
2003. Consumer price inflation has averaged 2.7% per year, against the Bank's
official target of 2.0%.
Please Note: This article is to inform your thinking, not lead
it. Only you can decide the best place for your money, and any decision you
make will put your money at risk. Information or data included here may have
already been overtaken by events and must be verified elsewhere should you choose to act on it.
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