Any forays by gold below $1,800 an ounce may well prompt renewed buying, says Credit Agricole CIB. In a weekly report on positioning by speculators, senior metals analyst Robin Bhar notes that investors have been seeking refuge from global currency instability, volatile stock markets and an uncertain economic outlook. “Also, they are worried about monetary reflation and (the) sovereign-debt crisis,” he says. “Europe’s bank balance sheets are becoming increasingly impaired, which is bullish for gold. In the short term, corrective probes below USD1,800/oz should uncover good buying opportunities.”
Gold Rises As Buyers Add To Positions When Recent Selling Abates
Gold posted a “relief rally” as investors continued to eye eurozone debt problems and added to positions after the recent selling abated, says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. Overall open interest declined for Monday, suggesting some liquidation as the market fell. At the time, investors were said to be selling gold to raise cash to cover losses in other markets. However, the open-interest data also shows longer-term participants entering the market, Gero adds. CME Group data shows that while overall open interest fell Monday, it rose for the April and June 2012 contracts. As of 1:40 p.m. EDT Tuesday, Comex December gold was $23.70 higher at $1,837 an ounce.
AREQUIPA, Peru Sept 13 (Reuters) - Barrick Gold (ABX.TO: Quote), the world's largest gold producer, plans to invest $550 million in Peru by 2013, said Darrell Wagner, general manager for Barrick Misquichilca, Barrick's Peruvian subsidiary on Tuesday.
Comex December gold futures are ended the U.S. day session solidly higher and near the daily high on safe-haven and bargain-hunting buying interest following selling pressure Monday. A lower U.S. dollar index and higher crude oil prices Tuesday also supported buying interest in the precious metals. December gold last traded up $29.60 at $1,843.00 an ounce. Spot gold last traded up $25.80 an ounce at $1,840.75. December Comex silver last traded up $1.128 at $41.345 an ounce.
Like a broken record, value hunting traders and investors yet again stepped in to "buy the dip" in gold prices Tuesday, following solid losses posted on Monday. It can be argued this phenomenon has occurred for the past 10 years, on a longer-term basis, but it has become more pronounced in recent months.
The U.S. dollar index traded lower Tuesday, on a corrective pullback after hitting a fresh six-month high Monday. This also supported fresh buying interest in the precious metals. However, the greenback bulls still have some upside near-term technical momentum to suggest a price uptrend can be sustained. If the U.S. dollar index continues to trade sideways to higher, that would be a bearish underlying factor for the precious metals markets.
Crude oil futures prices traded solidly higher Tuesday, which was also bullish for gold and silver. Crude oil prices hit a fresh five-week high Tuesday, which did give the crude bulls some fresh upside near-term technical momentum. Crude oil will remain an important "outside market" that will influence the precious metals markets.
The European Union sovereign debt crisis was still in the headlines Tuesday. Worries about default on debt payments by Greece and rising Italian bond yields are the EU debt crisis worries of the moment on this day. There are unconfirmed reports that China is thinking about stepping in to buy some Italian debt, and that Germany and France may soon make a joint statement regarding Greece's debt. But still, there has been no major breakthrough regarding effectively dealing with Greece's debt. The Euro currency has been hammered and the U.S. dollar index has rallied recently as investors fleed European Union assets. The EU debt crisis is still a major underlying bullish factor for gold and is prompting safe-haven demand for the metal.
Here's an important element for all gold traders to monitor closely: If the U.S. stock indexes drop below their August price lows, that would be extremely bearish for U.S. stocks and very likely significantly bullish for safe-haven gold.
The London P.M. gold fixing was $1,820.00 versus the previous P.M. fixing of $1,834.00.
Technically, December gold futures prices closed near the session high Monday. The gold market bulls have the solid overall technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at the all-time high of $1,923.70. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,793.80. First resistance is seen at $1,850.00 and then at this week's high of 1,865.20. First support is seen at $1,825.00 and then at $1,800.00. Wyckoff's Market Rating: 8.0.
December silver futures prices closed near the session high Monday. Silver prices were supported by bullish "outside markets" today that included a weaker U.S. dollar index and higher crude oil prices. The silver bulls still have the overall near-term technical advantage, amid choppy trading. Prices are in a choppy, 10-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the September high of $43.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week's low of $39.75. First resistance is seen at $41.50 and then at $42.00. Next support is seen at $41.00 and then at $40.50. Wyckoff's Market Rating: 6.5.
December N.Y. copper closed up 145 points 398.00 cents Tuesday. Prices closed near mid-range and saw short covering in a bear market. Copper prices were supported by bullish "outside markets" today that included a weaker U.S. dollar index and higher crude oil prices. Copper bears have the slight overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 415.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August low of 384.20 cents. First resistance is seen at 400.00 cents and then at Tuesday's high of 402.45 cents. First support is seen at today's low of 395.50 cents and then at this week's low of 390.50 cents. Wyckoff's Market Rating: 4.5.
Some sell stops have already been triggered in Comex gold, and more could be hit if the market were to fall through the $1,825- and $1,800-per-ounce areas, says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. If so, this conceivably could pull gold down as far as $1,750. Gero attributes the selling pressure largely to efforts by money managers to raise extra cash because of losses in their portfolios. “The inability again of the G-7 (Group of Seven nations) to come up with anything is disturbing some of the markets,” especially equities, Gero says. As of 9:19 a.m. EDT, Comex December gold was $19.30, or 1%, lower at $1,840.20 an ounce.
Comex December gold futures are trading lower Monday, on some profit-taking pressure from recent gains and amid a stronger U.S. dollar index. However, losses in gold are being limited by the festering European Union debt crisis that is back on the front burner of the market place Monday morning. December gold last traded down $14.30 at $1,845.10 an ounce. Spot gold last traded down $18.00 an ounce at $1,841.75. December Comex silver last traded down $0.667 at $40.95 an ounce.
The European Union sovereign debt crisis is back in the headlines to start the trading week. There has been no major breakthrough regarding dealing with what is now the EU debt-strapped nation in the spotlight: Greece. There is growing belief Greece is a sinking ship within the EU that cannot be righted. Italian bond yields are also rising, which is another indication of lack of confidence in the EU financial system. The Euro currency has plunged and the U.S. dollar index has rallied as investors flee European Union assets. While gold is seeing some selling pressure Monday, the EU debt crisis is still a major underlying bullish factor for gold.
The U.S. dollar index is trading higher again Monday and hit a fresh six-month high overnight. The greenback bulls have gained good upside near-term technical momentum recently, to now suggest a price uptrend can be sustained. If the U.S. dollar index continues to trade sideways to higher, that would be a bearish underlying factor for the precious metals markets.
Crude oil futures prices are trading weaker Monday, which is also somewhat bearish for gold and silver. Crude oil's recent price action hints prices will trade in a choppy range between $80 and $90 a barrel for the near term. Crude oil will remain an important "outside market" that will influence the precious metals markets.
There were reports overnight coming from some brokers that part of gold's weakness Monday is due to margin calls in other weak markets pulling some money out of the gold market.
If recent history repeats itself, bargain hunters will once again step in to "buy the dip" on perceived bargain hunting in gold.
Here's an important element for all gold traders to monitor closely: If the U.S. stock indexes drop below their August price lows, that would be extremely bearish for U.S. stocks and very likely significantly bullish for safe-haven gold. The U.S. stock indexes are starting off the week on very shaky ground as prices are now hovering not that far above the August lows.
There is no U.S. economic data due for release Monday.
The London A.M. gold fixing was $1,843.00 versus the previous P.M. fixing of $1,851.00.
Technically, December gold futures bulls still have the solid overall technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at the all-time high of $1,923.70. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,793.80. First resistance is seen at $1,850.00 and then at the overnight high of 1,865.20. First support is seen at the overnight low of $1,828.80 and then at $1,816.20.
December silver futures bulls still have the overall near-term technical advantage. Prices are still in a choppy, nine-week-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the September high of $43.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $40.00. First resistance is seen at the overnight high of $41.60 and then at $42.00. Next support is seen at the overnight low of $40.83 and then at last week's low of $40.385.
Survey participants in Kitco News’ Gold Survey are split over the direction for gold prices for next week, but there is a slight bias for higher prices as the worries about Europe and general concerns about the U.S. economy and political uncertainty there give investors reasons to buy the metal.
Still, not everyone is convinced, given the big volatility in the market and gold’s difficulty in sustaining moves over $1,900 an ounce.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, nine see prices up, while six see prices down, and six see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
Sterling Smith, commodity trading adviser and market analyst with Country Hedging, said he’s bullish because of the mounting problems in Greece, which is teetering on default. He said credit default swaps on Greek debt are at 91% chance of a default and one-year yields are now near 93%.
“I think it is not out of the question that an actual default from Greece occurs next week. The market has basically defaulted them already,” Smith said.
President Obama laid out a speech on Thursday outlining a roughly $450 billion plan to boost jobs, but faces stiff Republican opposition, so the U.S. political tensions also remain supportive for gold’s price, several said.
Yet not everyone is convinced gold is going up. Some said the negative sentiment toward the U.S. economy may have been priced in at current levels. Several added the market needs to build a base after two attempts to stay over $1,900, plus the Federal Open Market Committee meeting on Sept. 21-22 could keep traders sidelined. That doesn’t mean that volatility is going away, however.
Those who see weaker prices near-term point out that despite gold’s moves to new highs, the rally hasn’t been accompanied by rising open interest in the futures market nor a significant increase in ownership in the physically backed exchange-traded funds. Further, others said, the dollar has moved up, putting pressure on dollar-denominated gold.
Volatility will likely continue in the gold market next week, with headline news driving price direction, but traders’ biases favor higher prices for the metal.
The outlook for higher gold prices certainly is not unanimous and underscores the why values have likely swung so much lately.
The most-active December gold contract on the Comex division of the New York Mercantile Exchange settled at $1,859.50, up 0.9% on the week. December silver settled at $41.624, down 3.4% on the week.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, nine see prices up, while six see prices down, and six see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
Richard Baker, editor of the Eureka Miner and president of CP Analytics, said the direction for gold prices next week is a “tough call” but he leans toward firmer prices. He said there are several factors that could result in a push-pull on values.
“U.S. dollar dynamics will cloud the movements of gold next week as it strengthens against the euro (six-month high this morning). Falling global markets on growth concerns and Western economy uncertainty may also cause liquidations in the precious metals.
Nonetheless, this is a headline-driven market and gold will continue to benefit on the margin until there is improvement in near-term expectations for Europe and to a lesser extent, the United States. Key gold-referenced commodity ratios (e.g., oil, copper) remain at recession levels,” Baker said.
Those who expect higher prices said the persistent worries over European sovereign debt issues, especially regarding Greece, present strong support for prices. Greece is drawing closer to a default as bond yields there reach record highs. The euro currency fell to a six-month low against the dollar.
In Europe, several media reports said the European Central Bank confirmed the resignation of Governing Council member Juergen Stark. The reports said Stark is leaving due to personal reasons, but the reports said it was well known he was against the resumption of bond purchases last month. Also, Bloomberg News reported that Germany is preparing a way to recapitalize German banks should their Greek debt holdings swamp their balance sheets.
Gijsbert Groenewegen, managing partner of Silver Arrow Capital Management, said the news about Germany seeking to protect its banks shows how murky the European debt situation is, which makes investors seek the transparency of hard assets like gold and silver.
“The problem is the untransparency of the market. We just don’t know what the banks are holding,” he said.
He said the broader markets are also “tired” and could break easily on negative headline news, whether it is related to Europe or dismal U.S. economic news. How gold reacts maybe difficult to judge, though, he said.
If equity markets fall sharply, fund managers may be forced to sell gold holding to raise money to meet margin calls, so gold could fall if stocks do, too. But if that happens, Groenewegen said this would be an opportunity to buy gold.
Barclays Capital technical analysts said while they are bullish on gold prices, they’d rather buy the metal on dips “toward $1,750 against the $1,700 low. Our upside targets are at $1,930 and then $1,970.”
Several market watchers said that gold prices may just end the week little changed from Monday to Friday, but that wide price swings are likely. They noted that gold prices have had trouble staying over $1,900 and have met selling resistance there. Plus, despite the moves to new highs recently, it hasn’t been accompanied by a rise in open interest in the futures or greater buying of the physically backed exchange-traded funds.
In silver, Groenewegen said for that market to rally, it needs to push decisively through $43. Above there it could break out and retest $50. If silver can break through $50, then he expects a big rally that could take it to $100 very quickly.
Barclays Capital analysts said support for December silver is near $39.75, with resistance at $44.23.
Gold prices rebounded more than 1 percent on Thursday following a drop of 3 percent in the previous session, as sharply lower prices attracted bargain hunters, but improved risk appetite is likely to cap gains.
Spot gold rose as much as 1.5 percent to $1,842.89 an ounce after its most volatile day in two weeks, with a trading band of more than $80. It stood at $1,840.04 by 0152 GMT.
The most-active U.S. gold futures contract rose 1.6 percent to $1,846.6, before easing to $1,843.90.
"Some investors, speculators and physical buyers have shown a lot of buying interest at current prices, as they are much lower compared to a few days ago," said a dealer at a Tokyo-based bullion house.
Spot gold hit a record high of $1,920.3 on Tuesday.
The faith in gold's long-term bullish trend remained intact as concerns about global growth still run high, although the short term is likely to remain choppy.
"Concerns about economic growth in the United States and euro zone will keep supporting gold prices. Even though we may see liquidation repeatedly along the way, gold will rise toward $2,000," the dealer said.
Gold fell below $1,800 in the previous session, after risk appetite surged and investors abandoned the precious metal for the stock market, as Germany's top court rejected lawsuits aimed at blocking German participation in emergency loan packages, but gave its parliament more say in bailouts.
Adding to the risk appetite, Germany's industrial output jumped unexpectedly in July, offering hopes that Europe's largest economy may avoid recession.
The sharp price drop triggered a flood of buying on Asia's physical market, dealers said.
Investors will be watching a speech by U.S. President Barack Obama on job creation to Congress, after data showed the economy added no new jobs in August.
Holdings of SPDR Gold Trust and iShares Silver Trust remained unchanged.
Comex December gold futures are trading modestly lower in afternoon U.S. trading Tuesday. Prices backed well down from the overnight all-time record high of $1,923.70, on some mild profit-taking pressure. Tuesday was another "risk off" day in the market place as the U.S. stock indexes were lower and U.S. Treasury prices were higher. However, in afternoon trading Tuesday the U.S. stock indexes had moved well off their daily lows, which added a bit of downside pressure to the precious metals markets. December gold last traded down $5.40 at $1,871.60 an ounce. Spot gold last traded down $30.20 an ounce at $1,871.50. December Comex silver last traded down $1.304 at $41.745 an ounce.
Gold prices soared to a new record in early trading Tuesday as the European Union debt crisis continues to fester. There have been ongoing negotiations among EU leaders, with the underlying theme that there is still not uniform agreement on specific near-term actions to be taken. Italy is the focus early this week, with Italian bond yields rising amid talk of worker strikes about to occur there. European stocks markets were under pressure Monday on this situation, as the U.S. markets were closed for a holiday. U.S. markets played catch up Tuesday.
The surprising news overnight that the Swiss National Bank announced it will peg the Swiss franc to the value of the Euro currency did coincide with gold prices backing well off the record high scored in earlier trading Tuesday. The uncertainty of that situation or the big down move in the Swiss franc may have prompted skittishness in the gold market, or produced some margin-related selling in gold.
The U.S. dollar index traded solidly higher Tuesday and prices hit a fresh four-week high overnight. This did add some selling pressure into the gold market as the session wore on. More short covering was featured in the dollar index. While the greenback bears still have the overall near-term technical advantage, bulls have some fresh upside near-term technical momentum to begin to suggest a near-term market low is in place. However, fundamentally, notions of a fresh U.S. monetary stimulus package from the Federal Reserve in the coming weeks or few months will likely limit the upside for the dollar index.
Crude oil prices were also lower most of the session Tuesday, but did rebound in afternoon trading to trade near unchanged. The weaker crude oil prices during the day were a mildly bearish factor for the precious metals.
The U.S. and European stock markets will continue to be the key gauge of worldwide investor risk appetite in the market place. On days of better investor risk appetite (higher stocks) buying interest in gold will likely be limited. On days of shrinking investor risk appetite (lower stocks) gold will likely see more buying interest.
The London P.M. gold fixing was $1,895.00 versus the previous P.M. fixing of $1,895.00.
Technically, December gold futures prices closed nearer the session low Tuesday. Gold market bulls' still have some upside momentum on their side and their next upside technical objective is to produce a close above major psychological resistance at $2,000.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,817.60. First resistance is seen at $1,900.00 and then at the August high of $1,917.90. First support is seen at Tuesday's low of $1,861.80 and then at $1,850.00. Wyckoff's Market Rating: 8.5.
December silver futures were also pressured by bearish "outside markets" Tuesday that included a stronger U.S. dollar index and lower crude oil futures prices. The silver bulls still have the overall near-term technical advantage. Prices are still in a choppy, two-month-old uptrend on the daily bar chart. Bulls' next upside price objective is producing a close above strong technical resistance at the August high of $44.295 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $38.81. First resistance is seen at $42.00 and then at $42.50. Next support is seen at Tuesday's low of $41.64 and then at $41.50. Wyckoff's Market Rating: 6.5.
December N.Y. copper closed down 615 points 406.30 cents Tuesday. Prices closed near mid-range today and saw more profit-taking pressure from recent gains. Copper was also pressured by bearish "outside markets" today that included a stronger U.S. dollar index and lower crude oil futures prices. Copper bulls have faded recently. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week's high of 422.30 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 400.00 cents. First resistance is seen at 410.00 cents and then at Tuesday's high of 413.25 cents. First support is seen at Tuesday's low of 402.20 cents and then at 400.00 cents. Wyckoff's Market Rating: 5.0.
The Gold Price poked its head above $1900 per ounce Monday morning in London – its first breach of that level in nearly a fortnight – before easing back towards lunchtime.
The Silver Price in contrast fell to a low of $42.42 per ounce – 1.9% off Friday’s close – while stocks and major commodities were also down following news of US legal action against banks and yet another election defeat for Germany’s ruling party.
The FTSE was down 2.2% by lunchtime, while Germany’s DAX had lost 3.7%. Shares of European banks hit a 29-month low.
“As European woes reclaim center stage…these factors will support gold in the coming weeks,” reckons Edel Tully, precious metals strategist at UBS.
Service sector growth meantime slowed in Germany, the UK and the Eurozone last month, according to data published this morning.
“Fears of recession [are] back on the table,” says a note from Swiss precious metals group MKS.
On the currency markets the Euro slid below $1.42 before rallying, while the EuroGold Price set a new all-time high of €1344 per ounce – 1% above last month’s previous high.
Over in Germany, Chancellor Merkel’s CDU Party lost its sixth regional election of 2011 on Sunday.
“[Merkel's defeat] simply adds to the sense that saving the Euro is going to be made more difficult by opposition from within Germany,” says Sebastien Galy, senior foreign exchange strategist at Societe Generale in London.
Germany’s highest court is due to issue a verdict Wednesday on whether or not Eurozone bailouts have breached the country’s constitution.
“Countries that need help are getting tired of reforms,” reckons Kimihiko Tomita, foreign exchange manager at State Street.
“Countries that are paying money are getting tired of helping…the outlook of the Eurozone bailout scheme is becoming a bit shaky.”
“There is a growing expectation in the market that we will have to get some policy response from the ECB at some stage,” says Standard Bank’s de Wet.
“Either they will have to cut rates, or they will have to be more accommodating…whatever that will be, it is more likely to be positive for gold than not.”
Over in the US, the Federal Housing Finance Agency – which oversees government-backed mortgage firms Fannie Mae and Freddie Mac – filed 17 lawsuits on Friday against major investment banks.
The FHFA is suing the banks over the alleged mis-selling of $196 billion in residential mortgage back securities.
Here in the UK – where the Sterling Gold Price also hit a new record high at £1178 per ounce – there is a “strong case” for the Bank of England to focus a second round of quantitative easing on lowering banks’ high funding costs, according to a note from Kevin Daly, economist at investment bank Goldman Sachs.
“However, the Bank is unlikely to choose this option, as it believes that credit market intervention of this type should be the responsibility of the fiscal authorities.”
In China meantime the Shanghai Gold Exchange announced plans on Monday to raise its margin requirement on gold forward contracts for the third time in a month. The new higher margin requirements will take effect this Friday, 9 September – the day before the start of the mid-Autumn festival, which sees the SGE closed on Monday 12 September.
“Given that the last margin hike sparked a $100 liquidation in gold, this could be a rare bearish issue in an environment that remains otherwise bullish for gold,” reckons a Gold Bullion analyst here in London.
“It’s not going to have a major effect,” counters Standard Bank commodity strategist Walter de Wet interviewed by news agency Reuters.
“A lot of demand we see out of Asia is physical rather than speculative.”
“Margin and trading limit will revert back to normal after people come back from long holiday on 14 September,” adds a dealer in Hong Kong.
Gold rose above $1,900 an ounce on speculation that economic growth will slow and Europe’s debt woes will worsen, boosting demand for a protection of wealth.
European equities dropped after an election loss for German Chancellor Angela Merkel’s party spurred concern that support for bailing out Europe’s indebted nations may fade. Bullion jumped 3.1 percent on Sept. 2, the most in almost four weeks, as data showed the U.S. jobs market stalled in August, prompting renewed speculation that the country’s economy may be headed for a recession.
“With the implications of Friday’s U.S. payrolls report and intense focus on European sovereign issues this week, gold has two strong reasons to rally,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. “Additional evidence of U.S. economic weakness raises the likelihood that the Federal Reserve will announce further easing this month. As European woes reclaim center-stage and in turn investor nervousness extends, these factors will support gold in the coming weeks.”
Gold for immediate delivery gained $17.82, or 0.9 percent, to $1,900.70 an ounce by 7:06 p.m. in London, after touching $1,903.52. The metal set a record at $1,913.50 on Aug. 23. In New York, gold futures for December delivery were up $26, or 1.4 percent, at $1,902.90 on the Comex, after touching $1,908.40. Floor trading in the U.S. was closed today for the Labor Day holiday.
The metal fell to $1,895 in the afternoon “fixing” in London, used by some mining companies to sell output, from $1,896.50 at this morning’s fixing.
Bull Market
Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 33 percent this year, outperforming global stocks, commodities and Treasuries. The metal climbed to a record priced in euros and British pounds today.
Merkel’s party yesterday suffered its fifth election loss this year after the chancellor failed to sway voters in her home state with a campaign based on her handling of the euro area’s debt crisis. European investor confidence fell to the lowest level in more than two years in September, a report showed today.
European sovereign-debt risk rose to a record based on closing prices, according to traders of credit-default swaps. World Bank President Robert Zoellick said in Beijing on Sept. 3 that the global economy is entering a “new danger zone” amid Europe’s debt difficulties.
Growth Concerns
“U.S. growth concerns and euro-zone debt concerns continue to overshadow markets,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a report. Gold will be supported by “investors seeking to diversify from the volatile flows in equities.”
Gold exchange-traded-product holdings fell for a third day on Sept. 2, declining 1.7 metric tons to 2,142.4 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.
Silver for immediate delivery declined 0.5 percent to $43.0375 an ounce. Platinum rose 0.2 percent to $1,888 an ounce. Gold’s rally pushed its price above platinum today. An ounce of platinum bought 1.19 ounces of gold on average this year, data compiled by Bloomberg show. Palladium fell 1.3 percent to $764.50 an ounce.
Comex gold futures prices are rallying strongly in after-hours U.S. trading Friday afternoon. Bargain-hunting and technically related buying are featured. The active December futures contract has pushed well above what was a solid psychological resistance barrier of $1,800.00, which triggered buy stops and attracted still more trader demand. A lower U.S. dollar index Friday combined with notions the U.S. Federal Reserve will implement some fresh monetary stimulus sooner rather than later also boosted the safe-haven precious yellow metal. With the very strong rebound in gold prices Friday, now recovering over half of this week's sharp losses, the bulls are now becoming more confident that Thursday's low of $1,705.40 in December gold futures will mark a "reaction low" on the daily bar chart, in an uptrend that will now resume. The fact that gold prices were able to rebound strongly and close the week well up from the weekly low is also a bullish technical clue. December gold last traded up $60.80 at $1,824.00 an ounce.
Gold prices recovered from earlier losses Thursday to close modestly higher after a major sell-off Wednesday.
Gold futures for December delivery rose $5.90 to settle at $1,763.20 an ounce.
The modest gains came amid rumors that ratings agencies may look to downgrade Germany's credit rating.
Standard and Poor's, Fitch Ratings and Moody's Investors Services said Thursday that they did not have any updates to their AAA-rating on Germany.
On Wednesday, gold prices plunged $95.80, or 5.1%, to settle at $1,765.50 an ounce. Analysts said it was the biggest one-day drop since 1980.
The selling on Wednesday came after gold prices spiked above $1,900 an ounce earlier in the week. Gold had been on a winning streak since early July, when the metal traded around $1,500 an ounce.
Traders said the recent run-up was driven partly by expectations that the Federal Reserve will hint at new steps to support the economy. Fed chairman Ben Bernanke will speak Friday at the Kansas City Fed's annual retreat in Jackson Hole, Wyo.
Those expectations were called into question Wednesday following a better-than-expected report on durable goods.
In addition, gold prices were pushed lower as investors rushed to close contracts ahead of recently announced increases in margin requirements that went into effect Thursday.
The CME Group, which runs the Chicago Mercantile Exchange, announced a 27% increase in margin requirements on Wednesday. It was the biggest hike in years and came after the Shanghai Gold Exchange announced a similar move earlier in the week.
The hikes are designed to control volatility in the market by limiting the amount of leverage traders can use to maximize bets.
"Anyone that's bought gold in a leveraged play is being forced out as margins go up at the close of business today," said Adam Klopfenstein, a senior commodities market strategist at MF Global.
Klopfenstein said the gold market had become "crowded" as institutional investors, such as pension and sovereign wealth funds, plowed money into short-term positions in gold futures.
"The people buying gold without a long-term perspective are the ones that are dumping right now," he said. "Long-term, the bull case for gold is still there."
Jon Nadler, senior analyst at Kitco Bullion Dealers in Montreal, said the gold market is being driven mainly by psychological factors.
"It's like the waiting room at a psychiatrist's office," he said. "We've seen fear, despair, greed, denial -- mostly denial," he said.
Nadler said prices could fall further if the metal drops below $1,650 an ounce. But he wouldn't rule out a rebound of about $65 an ounce in the near term.
He said some investors are still expecting the Fed to signal additional stimulus measures at a meeting in Wyoming this weekend. Ben Bernanke, the central bank chairman, is scheduled to deliver the keynote speech Friday.
In any event, he said the recent volatility in the gold market is worrying for an asset that is supposed to be a hedge against volatility.
The drop on Wednesday was the biggest one-day price decline since 1980, he said.
"The psychological damage to the small investor is already shaping up in full force," he said. "They might start leaning toward the side that says we had a bubble, and bubbles don't deflate slowly once they're pricked."
Gold tumbled nearly 3 percent on Thursday to more than $200 below Tuesday's record highs, as investors cashed in scorching gains in the precious metal after the CME Group hiked gold trading margins for a second time this month.
Investment appetite for gold has cooled ahead of a widely awaited central bankers' meeting at Jackson Hole, Wyoming, as speculation grows over whether or not the Federal Reserve will signal a further round of U.S. monetary easing.
More quantitative easing -- or money printing -- from the Fed could significantly lift gold, but it could have further to correct if no additional action is signalled.
Spot gold was down 1.6 percent at $1,722.50 an ounce at 1351 GMT in volatile trade, having earlier touched a low of $1,702.44.
Investors cashed in on gold's latest rally after the yellow metal surged nearly 20 percent in early August to record highs at $1,911.46 an ounce.
Spot prices fell 4.3 percent on Wednesday, their biggest one-day drop since December 2008, after U.S. durable goods data beat expectations. U.S. gold futures also posted their sharpest slide since 1980.
"Gold seemed to be running ahead of where equity markets were pointing to in terms of downside risks -- those markets were stable and gold kept wanting to push higher and higher," said Macquarie analyst Hayden Atkins. "Once we got an upside surprise in data, we saw some of those longs washed out."
Any recovery from these lows will be dependent on what happens in the next few days. "It's not really clear what the Fed's intentions are," said Atkins. "People are waiting and watching."
Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust , declined by more than 27 tonnes on Wednesday, their biggest one-day outflow since Jan. 25. They have dropped nearly 60 tonnes this week, worth around $3.25 billion at today's prices.
Gold's losses were exacerbated late on Wednesday after the CME Group, the world's largest commodities exchange, raised margins on gold futures by about 27 percent, the biggest hike in more than 2-1/2 years and the second increase in a month.
But the metal's overall uptrend, which has seen it climb more than 20 percent this year, is still intact, analysts said.
"To be convinced you'd seen the top of the market you would have to see more signs of the issues that had lifted gold being resolved, such as the euro zone crisis, and U.S. growth coming back," said Mitsubishi analyst Matthew Turner.
Assets seen as cyclical or higher-risk than gold rose on Thursday as gold declined. European shares climbed after a raft of positive corporate results, oil prices firmed and the euro strengthened against the dollar.
EXPECTATIONS SCALED BACK
All eyes are now on Jackson Hole. Fed chief Ben Bernanke's speech on Friday is being closely watched for hints of a fresh round of quantitative easing, which some have speculated could be necessary to kick-start growth.
Bernanke is likely to use his speech to acknowledge disappointment over the pace of the recovery and explain how the Fed will tackle sluggish growth.
"It is fair to say that gold should be one of the bigger beneficiaries of another round of quantitative easing; anticipation of such has been a driver of gold's strength recently given worries about financial stability and a deteriorating economic outlook," said UBS in a note.
"That yesterday's U.S. durable good data release surprised on the upside raised a red flag, along with equities trading again in positive territory, and climbing Treasury yields.
"As expectations of what Fed Chairman Bernanke can say at Jackson Hole tomorrow are scaled back, gold should be one of the assets that reacts most," it added. "But there is also a positive aspect to this, in that gold appears to have already discounted disappointment at Jackson Hole."
Among other precious metals, silver was down 0.1 percent at $39.64 an ounce, spot platinum was up 0.1 percent at $1,804.74 an ounce, and spot palladium rose 0.8 percent to $749.50 an ounce.
Warren Buffett will invest $5 billion in Bank of America, stepping in to shore up the largest bank in the United States in the same way he helped prop up Goldman Sachs and General Electric during the financial crisis.
Bank of America shares rose 12.3 percent to $7.85, erasing some part of the stock's August losses. The jump also makes the warrants for Bank of America shares that Buffett gets in the deal instantly profitable.
Buffett and Bank of America said he made an unsolicited call to the bank on Wednesday morning, offering to make an investment. Even though the bank has said it did not need to raise capital, investors widely believed Bank of America needed more money and to show it could raise funds easily.
Bank of America has been plagued by fears that bad mortgage loans and legal liabilities from loans packaged into bonds by its Countrywide unit could drag it into tens of billions of dollars in fresh losses that would stretch its capital.
The deal proved again that Buffett has become something of a lender of last resort to the financial system, as he did with Goldman and also GE. Buffett's role in aiding the economy and the financial system has become symbolically important given the lack of policy options left for the U.S. government and the Federal Reserve to stimulate demand.
"This proves to the market that if the bank needs additional capital, which we don't believe they do, but if they needed to calm the market by raising capital, they could do it within 30 minutes with a quick call to Uncle Warren," said Sean Egan, managing principal of Egan-Jones Ratings.
INSTANT RETURN
Buffett's Omaha-based Berkshire Hathaway could make out even better financially than Bank of America did in the deal. Berkshire had a position that he sold in the fourth quarter of 2010 when the stock had an average price of $12.24.
The warrants to buy 700 million shares of common stock he gets in this deal are priced at just over $7.14 per share, with an unusually long 10-year exercise period. One Berkshire holder said the warrants were the best part of the deal by far.
"He could well make a 100 percent return on his investment in a few years," said James Armstrong, president of Henry H. Armstrong Associates. "It's amazing how much a little hug from Buffett is worth these days."
Bank of America will also sell Berkshire 50,000 shares of cumulative perpetual preferred stock with a 6 percent annual dividend, it said. Bank of America can buy back the investment at any time by paying Buffett a 5 percent premium.
It is virtually a mirror of the deal Berkshire did with Goldman in the depths of the crisis in fall 2008, except in Goldman's case it paid a 10 percent dividend. The Goldman deal paid Berkshire $15 a second in dividends until Goldman bought Buffett out earlier this year.
"It's a reasonably priced deal for Buffett. It's opportunistic," said Tom Russo, a portfolio manager at Gardner, Russo & Gardner who holds Berkshire shares.
Buffett told CNBC he had never spoken to Bank of America CEO Brian Moynihan before Wednesday, and that he dreamed up the idea while taking a bath.
BANK'S WOES
Earlier this month, a $10 billion lawsuit over soured mortgage securities by AIG helped spur fears about Charlotte-based Bank of America's liabilities, as well as questions around how it would pay for more losses.
In recent weeks, investors have sold shares, worrying that the bank might need more capital -- as much as $50 billion by some estimates -- to cope with losses and meet capital rules.
For shareholders who have watched the bank take two government bailouts and also seen the government step in earlier this year to block a planned dividend raise, further dilution would have been a bitter pill to swallow.
Moynihan said on an August 10 conference call the bank could add to its capital through earnings and asset sales. The call, organized by Fairholme Funds, one of the bank's largest investors, came two days after shares plunged by 20 percent.
But many were not convinced. On Tuesday, blogger Henry Blodget said the bank could face $100 billion to $200 billion in write-offs and balance sheet issues, a claim the bank denied, but one which pushed shares to early 2009 lows.
"This helps with the credibility gap that I think has existed in the minds of some shareholders. It reiterates the point that the balance sheet is healthy. They needed an endorsement in the market and they got it," said Jon Finger, managing partner of Finger Interests in Houston. Finger's family sold its bank to Bank of America years ago.
Moynihan has said the bank is targeting a 6.75 to 7 percent tier 1 common capital ratio by the end of 2013 under the new Basel III rules. Currently, the bank has $400 billion in total excess liquidity, and the company could meet all of its unsecured debt obligations within 22 months.
The cost of insuring Bank of America debt against default has also been rising, but contracted on Thursday after the Buffett deal, narrowing 68 basis points to 305 basis points. That means it would cost $305,000 a year for five years to insure $10 million in debt.
Comex December gold futures prices are trading lower Wednesday morning on more profit-taking pressure after the market absorbed heavy losses on Tuesday. The market place early Wednesday is leaning toward the "risk off" investor mentality, which is helping to limit the downside in gold. Importantly, no significant technical damage has been inflicted in gold and the sizeable downside price correction was not unexpected. December gold last traded down $15.80 at $1,845.50 an ounce. Spot gold last traded up $13.20 an ounce at $1,843.00. December Comex silver last traded down $0.345 at $41.985 an ounce.
Gold traders decided to book some profits after prices Tuesday pushed to a fresh all-time record high of $1,917.90 an ounce. During the month of August, gold prices had appreciated by around $300.00, so a corrective pullback was due. Gold prices could continue to correct lower the rest of this week. However, if recent history continues to play out, investors and traders will "buy the dip" in prices, reckoning they are getting a bargain buy.
This week's Federal Reserve symposium in Jackson Hole, Wyoming is attracting trader and investor attention. It was at last year's event in Jackson Hole that Fed Chairman Ben Bernanke unveiled a fresh U.S. economic stimulus package. Given the recent spate of weak U.S. economic data, some reckon the Fed will announce another monetary stimulus effort at this year's meeting (QE3). Bernanke is scheduled to give a speech in Jackson Hole on Friday. However, there is no clear consensus regarding whether Bernanke will spell out a fresh stimulus plan on Friday. Still, most commodity markets are being supported and the U.S. dollar index pressured this week by trader notions there will be some fresh U.S. monetary policy stimulus coming at some point, and sooner rather than later.
Anticipation regarding the Bernanke Jackson Hole speech Friday has temporarily pushed to the back burner the European Union debt crisis. But the ongoing EU debt crisis remains gold market bullish. Greek bond yields have hit record highs this week. There is a growing notion among economists and analysts that the European Union cannot, in its current form, survive the debt crisis. The EU debt crisis will remain an underlying bullish factor for gold.
The U.S. dollar index is trading weaker Wednesday morning and is trading near its recent lows. The greenback bears have the strong overall near-term technical advantage. That's also bullish for the precious metals.
Crude oil prices are trading near steady Wednesday morning. The crude oil bulls this week have regained a bit of upside technical momentum. The crude oil market will continue to be a major "outside market" force for the precious metals.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, the housing price index and the weekly DOE energy stocks report.
The London A.M. gold fixing was $1,850.00 versus the previous P.M. fixing of $1,876.00.
Technically, December gold futures prices Tuesday scored a big and bearish "outside day" down on the daily bar chart, whereby the daily high was higher and low was lower than the previous day's trading range. If there is good follow-through selling pressure and a lower close on Wednesday, then a bearish "key reversal" down would be confirmed, which classic technical analysis suggests would be one early technical clue that a market top is in place. However, twice already this month bearish key reversals have occurred on the daily bar chart and gold prices went on to score new highs. Thus, one cannot put a lot of stock in a key reversal suggesting a top is in place in this market. Gold bulls still have the solid overall near-term and longer-term technical advantage. There have been big daily moves on the upside recently, and some big daily downside corrections are not surprising. Prices are still in a 6.5-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the monthly chart. Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at Tuesday's record high of $1,917.90. Bears' next near-term downside price objective is closing prices below solid technical support at $1,817.60. First resistance is seen at the overnight high of $1,856.80 and then at $1,881.40. First support is seen at Tuesday's low of $1,826.00 and then at $1,817.60.
December silver futures prices Tuesday hit a 3.5-month high early on, but then price action also scored a bearish "outside day" down on the daily bar chart. The silver bulls still have the overall technical advantage. Bulls' next upside price objective is producing a close above strong technical resistance at $45.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $40.00. First resistance is seen at the overnight high of $42.51 and then at $43.00. Next support is seen at Tuesday's low of $41.565 and then at $41.00.
Comex gold futures prices came within a whisker of $1,900.00 an ounce Monday, and closed the day session sharply higher and near the new all-time record high of $1,898.60 an ounce. The market place was a bit calmer Monday, as world stock markets have at least temporarily stabilized amid the ongoing European Union debt crisis. However, there was fresh unrest in Libya during the weekend that prompted fresh safe-haven demand for gold. December gold last traded up $41.00 at $1,893.20 an ounce. Spot gold last traded up $37.70 an ounce at $1,890.50. December Comex silver last traded up $1.128 at $43.595 an ounce.
Fresh civil unrest in Libya has temporarily joined the European Union debt crisis as a major market factor. Rebels have taken control of the Libyan capital of Tripoli, with many believing Libyan leader Gadhaffi is on the verge of being overthrown. The uncertainty regarding the Libyan situation and the ongoing EU debt crisis are gold market bullish. There were no major weekend developments on the EU debt crisis front, but traders are keeping a keen eye out for any fresh EU news, and on how the EU financial markets are acting. Some key economic data coming out of Germany on Tuesday and Wednesday will be the next major pieces of the EU debt equation that traders will closely evaluate. Don't be surprised to see the European financial markets once again go from a simmer to a boil in the coming days.
This week's Federal Reserve symposium in Jackson Hole, Wyoming will attract keen trader and investor attention. It was at last year's event in Jackson Hole that Fed Chairman Ben Bernanke unveiled a fresh U.S. economic stimulus package. Given the recent spate of weak U.S. economic data, many wonder if the Fed will announce another monetary stimulus effort at this year's meeting (QE3). Bernanke is scheduled to give a speech in Jackson Hole on Friday. Speculation among traders and investors about further Fed easing of monetary policy is a mildly bullish development for the precious metals. However, most market watchers do not think the Fed will take significant action on monetary policy during Bernanke's speech Friday.
The market place continues to look to the U.S. stock market and its daily movements. The daily price moves in the U.S. stock indexes continue to be the gauge for measuring investor risk appetite in the market place.
The U.S. dollar index traded narrowly mixed Monday. The greenback bulls have faded recently and the bears have the overall near-term technical advantage. That's also bullish for the precious metals.
Crude oil prices are trading higher Monday on short covering following strong losses late last week. Price late last week hint that crude oil futures prices may retest the August low. The crude oil market will continue to be a major "outside market" force for the precious metals.
The London P.M. gold fixing was $1,877.50 versus the previous P.M. fixing of $1,848.00.
Technically, December gold futures prices closed nearer the session high Monday. Gold bulls have the strong overall near-term and longer-term technical advantage. There are no early technical clues to suggest a market top is close at hand, even though this is a mature bull market run that has gone parabolic. There have been big daily moves on the upside recently, but traders now need to expect bigger downside price corrections coming up, in the overall uptrend. Gold prices are in a 6.5-month-old uptrend on the daily bar chart and in a 10-year-old uptrend on the monthly chart. Bulls' next near-term upside technical objective is to produce a close above major psychological resistance at $2,000.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,817.60. First resistance is seen at Monday's all-time high of $1,898.60 and then at $1,925.00. First support is seen at Monday's low of $1,858.00 and then at Friday's low of $1,824.50. Wyckoff's Market Rating: 10.0.
December silver futures prices closed nearer the session high and scored a fresh 3.5-month high Monday. Silver was supported on spillover buying from the gold market. Silver bulls have gained solid upside near-term technical momentum recently. The silver bulls have the solid overall technical advantage, too. Bulls' next upside price objective is producing a close above strong technical resistance at $45.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $40.00. First resistance is seen at Monday's high of $44.10 and then at $44.50. Next support is seen at $43.00 and then at Monday's low of $42.57. Wyckoff's Market Rating: 7.5.
December N.Y. copper closed down 370 points 396.35 cents Monday. Prices closed nearer the session low. A big bearish pennant pattern is still in place on the daily bar chart. Copper bears have the overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 410.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the August low of 384.20 cents. First resistance is seen at 400.00 cents and then at Monday's high of 403.35 cents. First support is seen at last week's low of 394.50 cents and then at 392.50 cents.
Sources : http://www.kitco.com/reports/KitcoNews20110822JW_pm.html
Record gold prices mungkin bulan depan akan koreksi sekitar 8%, namun logam safe-haven juga dapat rally ke $2,400 per ounce tahun depan karena investor mencari perlindungan di tengah gejolak ekonomi global, global head di INTL FCStone pada hari Sabtu (20 Agustus 2011).
Emas dapat mencapai $2,000 per ounce pada akhir tahun ini karena pembelian bank sentral dan alasan ekonomi meningkatkan daya tarik logam mulia adalah sebagai sebuah perlindungan, kata Kothari.
“Emas akan naik menjadi $2,000 atau lebih pada akhir tahun 2011 jika ekonomi global tetap sama,” katanya. “Bank-bank sentral juga membeli emas, yang mana ini adalah hal positif.”
Record gold prices may be heading for a correction of about 8 percent next month, but the safe-haven metal may also rally to $2,400 an ounce next year as investors seek refuge amid global economic turmoil, a global head at INTL FCStone on Saturday.
"Trees don't grow till heaven. I think buyers need to be beware. we are in a 'caveat emptor' market," said Jeffrey Rhodes, global head of precious metals at the brokerage and an industry expert, told reporters at a conference on gold in the southern Indian state of Kerala.
International gold struck a record of $1,877 an ounce on Friday, still on track for its biggest one-month rise in nearly 12 years in August and its biggest one-week gain since early 2009.
Rhodes said gold may retrace to $1,725 by next month, and then race ahead.
"My problem is that people are buying gold and they don't understand why they are buying gold and that's a big problem and that is a classic symptom of a bubble," said Rhodes.
Rhodes said there is an absence of "real motivation" for investors to cash in their gold holdings to cover losses from the equity markets.
On Friday, global equity markets slid anew and gold set a second-straight record high as fears of a possible U.S. slide into recession and concerns related to Europe's debt crisis kept investors on edge.
If economic worries persist, gold prices could continue on their upward trajectory, although market watchers said the yellow metal remains vulnerable to profit-taking following recent sharp gains.
Gold prices set an all-time nominal high on Friday of $1,881.40 an ounce on the Comex division of the New York Mercantile Exchange as worries about European banks and dismal economic data in the U.S. catapulted prices upward.
The most-active December contract settled at $1,852.20, up 6.3% on the week. December silver settled at $42.467, up 8.5% on the week.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 19 see prices up, while two see prices down, and none see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.
Gold’s short move above $1,880 has pushed prices to a new all-time high in real U.S. consumer price index-adjusted terms, noted Deutsche Bank analyst Michael Lewis.
Other inflation-adjusted measuring methods, such as the calculator used by the Minneapolis Federal Reserve Bank, put gold’s inflation-adjusted high around $2,400.
Charles Nedoss, senior market strategist with Olympus Futures, said despite the furious rally in gold, he believes there is enough momentum and uncertainty in the global markets to continue to support prices.
Technical chart resistance, he said, is at the round number of $1,900, which is not far from where gold tagged an all-time nominal high. Support comes in at $1,800 and then $1,774, but he added that gold prices could fall as far as $1,704, which is the 20-day moving average, without breaking the recent trend.
The situation in Europe will likely guide market direction again next week. After a slew of disappointing U.S. data this week, “focus will be very much on whether incoming eurozone data will paint a similarly dismal picture,” said BNP Paribas. After German gross domestic product data was lower than expected there is little hope of other regions posting better-than-expected numbers.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said next week the International Monetary Fund, the European Union and the European Central Bank will visit Greece to evaluate the progress toward meeting the conditions to allow the next tranche of the 2010 aid program.
“As we saw previously, this poses event risk as the weaker growth performance (and projected) makes the fiscal targets more difficult to achieve. In a larger sense, the dispute over Greek collateral points to a still laborious process approval of the second Greek aid package,” he said.
Austin Kiddle, analyst at London-based firm Sharps Pixley, said with the economic woes seeming to carry on for the foreseeable future, the outlook for gold as a safe haven is strong.
But he said there is some concern about a potential gold market bubble, which would be “dangerous territory” for a safe haven.
“Gold’s major strength in the last 5,000 years has been its stability, its ability to store wealth in times of hardship and to protect your saving from becoming worthless. At this point, in time we can see that gold is reacting to a perfect storm of factors in the shape of high demand from China and India, a weakening U.S. Dollar, mine supply decreasing year on year, sovereign debt crisis in Europe and an increase in worry in the market as a whole,” he said.
For now there’s enough interest in gold to keep prices support, but Kiddle said, “unless there is a new major crisis popping up anytime soon, we feel that gold is currently over-brought and should see a small correction. However, as with most perfect storms there is always an air of uncertainty that underlies most systems, and a single factor such as more countries following Venezuela's lead or yet more debt downgrades, could easily push gold closer to US$2,000 this year.”
There has been some market chatter that gold prices are going parabolic and Nedoss said that’s not entirely inaccurate. “It kind of has been, but we have had some days of relief,” he said, emphasizing some recent pull backs.
Gold’s rapid rise has some traders wondering if the market is looking to touch $2,000, only to reverse once the milestone hits. While that may be true, the worries over the E.U. banking system and general financial gloom means that people are concerned which gives gold legs.
“Gold is a vehicle and people are flocking to it because of fear. It is a store of value and it is a currency,” Nedoss said.
Despite the rise in prices, Ken Morrison, editor and founder of online newsletter, Morrison on the Markets, pointed out that holdings in the world’s largest exchange-traded fund, the SPDR Gold Trust (GLD), remain under the highest level of 1,320 metric tons set on June 30, 2010.
“Since Aug. 1 when ownership was 1264 tons, the GLD ownership has ranged from 1310 on Aug. 8 to a low of 1260 on Aug. 15, and now back at 1288 as of Thursday's close ..... If GLD is the proxy for the average investor’s appetite for gold, this is not providing strong evidence about the presumed ‘rush’ to own gold at least for the retail investors or the money managers without futures accounts,” Morrison said.
Looking at other precious metals markets, Nedoss said, silver is playing a bit of catch up with gold. “The rally took a while to get going,” he said, but the move above the 20-day moving average is a positive sign. The close above $42.31 is very positive for silver.
For the platinum metals group, market watchers said labor negotiations will continue to influence the direction of metals. A platinum trader said as long as tensions between mineworkers and mine owners persist, it will put a floor under prices. The trader noted talks are being held between workers at Impala Platinum and Anglo Platinum.
Despite the potential impact any labor unrest may cause, Deutsche Bank’s Lewis said ongoing weakness in the U.S. labor market will hamper PGM demand, particularly for palladium. “We find that the labor market remains a key driver for U.S. auto sales. Since the lion’s share of platinum and palladium demand is in the use of auto-catalysts, and with North America constituting almost 30% of global demand for palladium and less than 20% for platinum it would suggest the PGM complex and specifically palladium could under-perform in an environment where the US labor market remains weak,” Lewis said.
One kilogram gold bars are seen in this picture illustration taken at the Korea Gold Exchange in Seoul August 9, 2011.
Gold prices rallied more than 2 percent to a record highs on Friday as investors sought refuge from a second day of hefty losses on the stock markets, hurt by deepening concerns over slowing economic growth and the outlook for euro zone banks.
A raft of weak economic data this week has sparked heavy selling of equities and cyclical assets like industrial commodities. European shares extended losses on Friday after posting their biggest one-day fall since March 2009 on Thursday.
"At the moment the market is just looking for relative safe havens," said Mitsui Precious Metals analyst David Jollie. "You can see that in the sell-offs across equity markets overnight. The strength of gold is the other side of the coin from that."
Spot gold was up 2.1 percent at $1,862.26 an ounce at 0918 GMT, having peaked at $1,867.30 an ounce. It is on track for its biggest one-month rise in nearly 12 years in August and is up 31 percent so far this year.
Germany's blue-chip Dax index slid 4.1 percent to a 21-month low on Friday, while Britain's FTSE 100 fell below the 5,000 mark. Investors spooked by the slide flocked to government bonds and gold as a haven from risk.
German government bonds pushed higher and looked set to scale new record peaks as shares tumbled. U.S. Treasuries, another perceived safe haven, also rose.
Most raw materials also fell. Oil tumbled, with U.S. crude futures down nearly $3 a barrel and Brent crude off 1.7 percent, while base metals also declined.
"As long as uncertainty on financial markets remains high and the situation does not calm, gold should retain its status as a store of value and the price should continue to climb," said Commerzbank in a report on Friday.
BROAD-BASED SURGE
Gold's surge was broad-based, with the precious metal hitting record highs in dollars, sterling, euros, yen and, for the first time since mid-2010, Swiss francs.
Gold prices have rallied sharply in the safe-haven franc since the Swiss National Bank announced fresh measures to counter strength in the currency on August 10.
It held close to its record even as the Swiss franc rose, benefiting from demand for currencies perceived to offer a safe haven. Its gains were capped by ongoing speculation Swiss authorities will again step in to curb the currency's strength.
The euro meanwhile fell broadly on Friday on the back of a sell-off in European shares, after a raft of weak U.S. economic data and concerns about European banks drove investors away from stocks and into U.S. Treasuries. The dollar, the world's most liquid currency, edged higher.
The latest gold rally came as fresh buyers were attracted to the market, analysts said.
"Macro hedge funds were noted buyers and may also have dominated demand during yesterday's Comex sweeps, which accounted for much of the price action," said UBS in a note.
"Generally, these players have been on the sidelines in recent months, waiting for a better opportunity to buy; with a proper correction failing to materialize, their patience has probably run out. If participation from the macro hedge fund community has only just started to accelerate, this adds a new dynamic to the gold market."
The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, said on Thursday its holdings rose by nearly 15 tonnes from the day before.
Other precious metals also broadly benefited from gold's rise, with platinum rising to its highest since early May, up 2 percent at $1,873.99 an ounce, and silver climbing 1.8 percent to $41.30.
Some investors are still buying platinum on the back of a gold:platinum ratio near 1, analysts said, although this trade made less sense now than in previous years as platinum, an industrial metal, faces a soft demand picture.
"With the economic outlook deteriorating we would not be surprised to see downward pressure on prices emerge," said ScotiaMocatta in a monthly report.
Palladium meanwhile bucked the trend for gains, remaining flat at $751.47 an ounce.
(Kitco News) -Tightening supplies for commodities, even in the face of reduced global growth, should keep resource markets supported, and investors should focus on commodities where demand is strong and supply risks are a concern, said Barclays Capital on Tuesday.
The bank said in a research note it prefers long positions in copper, corn and crude oil and it suggests additional protection to economic uncertainty by buying gold.
The second –half of 2011 is expected to be a bumpy ride for investors, said Barclays Capital, with volatility likely as global growth should slow. “The outlook remains uncertain as markets come to grips with recent developments and access the potential effects on global growth. Our economists continue to expect the global economy, and the U.S., to avoid a double-dip recession. However, it has become clear that the global economy cannot generate wealth at the pace originally forecasted by the markets,” they said, estimating global GDP at 3.8% year-over-year in 2011, versus 5% in 2010.
Commodities markets will have an “increasingly important” influence in setting the pace for global growth, especially with supply struggling to keep up with demand in several important energy and food markets. “The vulnerability of commodity supply to geopolitical shocks, bad weather and labor disruptions has rarely been higher,” they said.
They said investors can best position themselves with a long position in Brent crude oil futures and London Metal Exchange copper, but they said to avoid near-term volatility to buy deferred contracts. They also recommend buying corn.
Gold is also rated a buy, which continues the long position already recommended by the bank.
“Supportive factors include physical exchange-traded product flows picking up strongly on the recent worsening in financial market conditions and central banks buying gold once more. Gold also looks likely to benefit in a range of different market scenarios. If Europe’s debt problems continue to mount prices are certain to go higher, but the cure to this issue and that of lackluster growth in the U.S., looks certain to result in further currency debasement which should also prove positive for the yellow metal,” they said.
Barclays sees gold hitting $2,000 an ounce on three factors: macroeconomic insecurity on the back of heightening sovereign debt risks and credit downgrades, a sharp acceleration of broad investment demand, which was mostly absent in the first half of 2011 and central bank buying has returned and from new corners in sizeable tranches, a trend that is set to continue. “We now expect prices to average $1,800 in the second of 2011 and $2000 in 2012,” they said.
They are cautious on silver, noting the record amount of supply scrap on the market and record mine output. Still, because they are bullish on gold, silver should benefit from investment demand. “But should it ease, we would expect prices to remain volatile until they find physical support on the downside,” they said.
Barclays forecasts silver prices to set a fresh annual average high in 2011 at $36.70 an ounce and to remain elevated in 2012 at an annual average of $35. “However, as the investment demand growth slows, the market will look to the physical market for support, where consumers of the metal are likely to enter at much lower levels,” they said.
Their forecast for platinum is for it to average at $1,808 an ounce in 2011 and to extend their gains to an annual average of $1,835 in 2012. “Barring near-term pressure, platinum prices are likely to break to the upside toward the end of the year, as actual and potential disruptions mean that supply is struggling to keep pace with demand,” they said.
Palladium prices are expected to set a new record annual-average high in 2011 at $798 an ounce and to extend its gains into 2012 and average $860 an ounce, they said. The palladium market should see a second year of supply deficits of 112,000 ounces.
SINGAPORE, Aug 16 (Reuters) - Spot gold held onto the gains
made in the previous session on Tuesday as dismal U.S. data
added to concerns about economic growth, while investors wait
for a meeting between France and Germany for any solutions to
the euro zone debt crisis.
FUNDAMENTALS
* Spot gold was little changed at $1,764.09 an ounce
by 0021 GMT, after rising 1 percent in the previous session.
* U.S. gold GCcv1 rose half a percent to $1,767.20 an
ounce.
* The largest gold fund players including hedge fund titan
John Paulson stuck with their bullion bets in the second
quarter, opting not to follow George Soros who further reduced
his gold ETF holdings.
* Holdings of the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, stood at 1,260.173 tonnes by
Aug. 15, unchanged from Friday.
* The latest U.S. data showed manufacturing in the New York
area contracted for the third straight month in August, boding
ill for growth prospects.
* Investors are eyeing a meeting between France's Nicolas
Sarkozy and Germany's Angela Merkel on how to make the euro zone
work more effectively amid persistent doubts in financial
markets over Europe's ability to solve its sovereign debt
crisis.
* Spot platinum gained 0.4 percent, on course for its
sixth consecutive session of gains, its best run since January.
MARKET NEWS
* Wall Street stocks rose for a third day on Monday as
investors saw Google's offer for phone maker Motorola Mobility
as an excuse to jump back into the market after weeks of sharp
selling.
* The euro hovered below a two-week high against the Swiss
franc hit in the previous session on speculation the Swiss
National Bank may take action to curb gains in the currency by
setting an exchange-rate target this week, while the dollar
index edged up 0.1 percent.
DATA/EVENTS
0600 Germany GDP flash yy Apr 2011
0900 EZ Eurostat trade nsa, EUR Jun 2011
0900 EZ GDP flash estimate yy Apr 2011
1145 U.S. ICSC chain stores yy Weekly
1230 U.S. Import prices mm Jul
1230 U.S. Build permits: change mm Jul
1230 U.S. House starts mm: change Jul
1230 U.S. Housing starts number mm Jul
1315 U.S. Industrial output mm Jul
PRICES
Precious metals prices at 0021 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1764.09 -0.91 -0.05 24.28
Spot Silver 39.68 -0.16 -0.40 28.58
Spot Platinum 1810.24 6.79 +0.38 2.42
Spot Palladium 749.49 5.19 +0.70 -6.26
TOCOM Gold 4363.00 62.00 +1.44 17.00 28654
TOCOM Platinum 4512.00 41.00 +0.92 -3.92 3400
TOCOM Silver 97.50 1.30 +1.35 20.37 318
TOCOM Palladium 1875.00 -6.00 -0.32 -10.59 46
COMEX GOLD DEC1 1767.20 9.20 +0.52 24.33 3554
COMEX SILVER SEP1 39.70 0.39 +1.00 28.31 1605
Euro/Dollar 1.4429
Dollar/Yen 76.77
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
