Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15
Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - 28th June 15
Investor Stock Play for Two Growing Missile Threats - 28th June 15
Stock Market Uptrend/downtrend Inflection Point - 27th June 15
Greece Crisis OXI - 27th June 15
Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - 27th June 15
It’s Time to Change the Way You Look at Disney Forever - 27th June 15
Flatline Investing and Dead End Debt Schemes - 27th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

Gold Uptrend "Could See Significant Damage", Recent Falls "Largely Down to Futures Traders"

Commodities / Gold and Silver 2013 Feb 25, 2013 - 12:31 PM GMT

By: Ben_Traynor

Commodities

U.S. DOLLAR gold prices climbed back above $1590 an ounce Monday morning, extending gains from Friday following sharp losses last week, while stock markets also rallied, although the FTSE 100 in London saw smaller gains that other European indexes following news of a downgrade to Britain's credit rating.

"Support [for gold] sits at $1522, the low from December 2011," says the latest technical analysis from Scotia Mocatta.


"A break of that level will do significant damage to the long-term uptrend."

Last week's gold price fall was "largely due to the futures market", according to one analyst.

The gross short position held by speculative traders in gold futures and options on the Comex has neared or exceeded 60,000 contracts only five times before in the last eight years. On these occasions the average six-month change in the gold price, according to analysis by BullionVault today, has then been a gain of more than 28%.

Silver meantime climbed back above $29 an ounce Monday morning, as other industrial commodities also gained and US Treasuries fell. 

On the currency markets the Pound fell to its lowest level since July 2010 against the Dollar this morning, dropping more than 1% from Friday's close before recovering some ground as the morning went on, as markets reacted to ratings agency Moody's decision late Friday to strip the UK of its Aaa credit rating.

"The downgrade was expected and priced into credit markets," says a note from Morgan Stanley.

"Hence, we expect only a limited currency response in the short term."

The Sterling gold price ticked back above £1050 an ounce for the first time in just over a week this morning.

The Yen meantime fell to a 33-month low against the Dollar at the start of Monday's Asian trading, following reports that Japan's government is set to nominate Asian Development Bank president Haruhiko Kuroda as governor of the Bank of Japan.

"Kuroda is a fan of a weaker Yen and of deflation bashing," explains Societe Generale strategist Kit Juckes in London.

The government is also reported to be planning to nominate university professor Kikuo Iwata as one of Kuroda's deputies.

"Perhaps thanks to the inclusion of Iwata the market will expect more eye-catching bold easing measures," says Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo.

The world's biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) saw a further 9.6 tonnes in outflows Friday. Over the whole of last week, the volume of gold held to back GLD shares fell 3.2% to 1280.7 tonnes. 

The world's biggest silver ETF iShares Silver Trust (ticker: SLV) by contrast saw its bullion holdings grow by 0.8% to 10,602.8 tonnes.

The amount of gold held by all exchange traded funds tracked by Bloomberg saw its biggest weekly drop since August 2011 last week, falling to a five-month low of just over 2560 tonnes.

"Market participants appear cautious after last week's sharp sell-off," says Nick Trevethan, senior commodities strategist at ANZ.

"While we have downgraded our near-term views, gold prices should accelerate in the second half [of 2013] on improving demand from India and China."

Indian gold industry insiders will be watching for any further measures aimed at reducing bullion imports in this Thursday's budget, after India hiked import duties on gold to 6% last month.

"Suppose you take the worst case scenario and the government completely bans the import of gold.

Do you think that Indian people would stop buying gold?" asks Prithviraj Kothari, director at

Riddhi Sidhi Bullions in Mumbai, adding that such a move would increase demand for smuggled gold.

India is traditionally the world's biggest gold buying nation, a position it held in 2012 according to the most recent World Gold Council data, and has to rely heavily on imports, which contribute to its trade deficit. 

A report published by India's central bank earlier this month suggests encouraging people to invest in gold-linked financial products rather than buy gold outright as one of way of reducing the reliance on gold imports. Seeking to increase the amount of gold people deposit with banks was another proposal.

"The government should come out with a voluntary gold deposit program where it won’t ask any questions about the source of gold, and offer an annual interest rate to depositors," suggests Bachhraj Bamalwa, president of the All India Gems & Jewellery Federation.

Kazakhstan and Russia meantime both added to their gold reserves last month for the fourth month running, according to International Monetary Fund data, while Azerbaijan bought gold for the first time in a decade.

Monday sees the second day of voting in Italy's general election, with newswire Reuters reporting a "surge in protest votes" for parties such as the Five Star Movement led by comedian Beppe Grillo.

"There are similarities between the Italian elections and last year's ones in Greece, in that pro-euro parties are losing ground in favor of populist forces," says Riccardo Barbieri, chief economist at Mizuho International in London.

"An angry and confused public opinion does not see the benefits of fiscal austerity and does not trust established political parties."

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.(c) BullionVault 2013

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.

Ben Traynor Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History