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Commodities / Gold & Silver 2009 Nov 11, 2009 - 07:39 AM GMT

By: Adrian_Ash

Commodities

THE PRICE OF GOLD rose to fresh record highs against the US Dollar for the fifth session in six in early London dealing on Wednesday, recording an AM Gold Fix above $1114 an ounce.

Up by more than 28% for 2009 to date for US investors, gold also rose against all other currencies, breaking its best level against the Japanese Yen since July 2008 above ¥3220 per gram as world stock markets gained, government bonds held steady, and crude oil ticked higher from $79 per barrel.


Gold also broke new 8-month highs above €743 and CHF 1121 an ounce for Eurozone and Swiss investors, trading 6% and 4.5% respectively off February's all-time record peaks.

"Buying of gold and silver emerged around noon," says one Hong Kong dealer, confirming what both Japanese dealers Mitsui and MKS Finance – a division of the Swiss refining group – again called "a quiet day" for physical dealing.

"That enabled the metals to defy a weak Euro. When the buying was done, the metals resumed their Euro-following mode."

"Gold found the impetus to rally when China's trade balance data was released," says another analyst.

Beijing today reported a better-than-expected 13.8% drop in China's exports for Oct. from the same month last year. Imports, in contrast, were only 6.4% down.

"We're very, very encouraged to see what's happening here...to try to produce an economy more dependent on domestic sources of growth," said US Treasury secretary Tim Geithner of Japanese and Chinese consumer markets this morning in Tokyo.

For the world economy to become more stable, "It's going to be less driven by the American consumer," he went on. "You need to see a change in the sources of growth."

Geithner will join President Obama in Singapore this weekend for the annual Asia-Pacific APEC summit.

China's domestic retail sales rose 16.2%, said the Statistics Bureau today. Industrial output rose 16.1% from Oct. '08. China now leads the world in private gold buying, according to research by BullionVault, overtaking Indian consumers and spending the equivalent of 1.8% of household savings on physical metal.
 
Today the Hong Kong Mercantile Exchange said it will launch gold futures trading in Jan. 2010, aiming to "establish benchmark pricing of gold in the Asian time zone," according to chairman Barry Cheung.

Forty per cent owned by Chinese state-controlled businesses, the HKMEx had previously hoped to launch local energy-price contracts. Earlier this year it signed an agreement to use the territory's new vaulting facilities at Chek Lap Kok airport for settlement and storage.

The HK Monetary Authority – Hong Kong's unofficial central bank according to MarketWatch – opened the vault that same month by moving its two-tonne holdings (now worth $74 million) from London depositories.

"We remain bullish [on gold] as long as the market remains above the lower channel support line at 1032.78," says Axel Rudolph, technical analyst at Commerzbank, in a note today.

"The gold/silver ratio is rising once more with gold appreciating at a higher rate than silver and the correlation between the two precious metals decreasing," he adds.

"The up move has been so strong," say Scotia Mocatta's technical analysts, "[the] risk lies with further extension to 1130. Only a close back below 1070 will shake the long metal positions."

Back in Asia today, the Vietnamese government said it will allow imports of gold bullion to resume for the first time in 17 months in a bid to suppress local prices.

Local Vietnamese gold prices rose to fresh record highs on the news, equivalent to $1282 an ounce according to Bloomberg data.

"Taking advantage of unstable international gold prices and peoples' concern that prices will rise further," said a statement from central bank governor Nguyen Van Giau, "local speculators have pushed prices to a very high level."

Aimed at "stabilizing the gold market and preventing speculation", the statement sent the Vietnamese Dong to a 16-month low on the currency market, down 6.4% on 1-year forward contracts.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

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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