Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
Killing the Maximum-Wage Myth - 23rd Apr 14
U.S. Quarterly Economic Review - Optimism at the Fed - 23rd Apr 14
Why Mohamed El-Erian Left Pimco - Video - 23rd Apr 14
QE Is A Fraud Perpetrated By Made Men - 23rd Apr 14
Gold and Miners Outperform Once Again - 23rd Apr 14
G-20 and the US Tell the Bank of Japan to End Quantitative Easing - 23rd Apr 14
How to Get in the Trading Game and Profit - 23rd Apr 14
Fed Follies, U.S. Housing Market Fiasco - 23rd Apr 14
What Will December 31, 2014 Financial Headlines Look Like? - 23rd Apr 14
Why Gasoline Prices are Surging Again - 22nd Apr 14
Cold War 2.0 - 22nd Apr 14
The JIS – Junk Ideology Syndrome - 22nd Apr 14
How to Avoid Losing All Your Money - 22nd Apr 14
Silver Up, Stocks S&P Down - 22nd Apr 14
U.S. Mainstream Media Propaganda Setting the Stage for War With Pakistan - 22nd Apr 14
U.S. Interest Rates are NOT Rising! - 22nd Apr 14
A Crisis vs. the REAL Crisis: Keep Your Eye on the Debt Ball - 22nd Apr 14
Bitcoin Implications of Lack of Price Action - 22nd Apr 14
Japan - The Twilight Of The Rising Sun - 22nd Apr 14
Is This What a Credit Bubble Looks Like? - 22nd Apr 14
The Dark Side Of The Silver Mining Industry - 21st Apr 14
Strong U.S. Dollar Rally Could Pull Rug From Under Gold and Silver - 21st Apr 14
Silver Feeble Rally Fails to Hold Breakout, Falling Back Towards Support - 21st Apr 14
Stock Market Smart Money – All Out or More to Go? - 21st Apr 14
Fast Rising Pump Prices Counterattack - 21st Apr 14
Extreme Climate Change And Life On This Planet - 21st Apr 14
Gold and Silver Stocks Sitting Tight - 21st Apr 14
Stock Market Minor Correction Imminent - 21st Apr 14
Gold and Silver - Counting Blessings and Tender Mercies - 20th Apr 14 - Jesse
The CIA Through The Looking-Glass - 20th Apr 14 - Stephen_Merrill
Gold And Silver - Gann, Cardinal Grand Cross, A Mousetrap, And Wrong Expectations - 20th Apr 14 - Michael Noonan
Nikkei Stock Market - Sell Japan - 20th Apr 14 - WavePatternTraders

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold and Silver Enter "Summer Lull", Will Miss "Commodity Supercycle" Says SocGen

Commodities / Gold and Silver 2013 Jul 08, 2013 - 03:38 PM GMT

By: Adrian_Ash

Commodities

The GOLD PRICE ticked higher in London trade Monday morning, rising from its lowest weekly close in three years as Asian stock markets fell but Eurozone shares jumped over 2% higher.
 
Major government bonds ticked higher, easing interest rates down, while the US Dollar held steady after last week's strong gains on the currency market.


A Wall Street Journal survey says the majority of economists think that Friday's jobs data mean the US Federal Reserve will start reducing its quantitative easing program as early as September.

Silver bullion today ticked back above $19.22 per ounce, regaining half of last week's 3.6% drop.

"Unlike the April rout [in gold prices]," says the latest monthly report from brokers INTL FCStone, "which drew out a slew of buyers, we are not seeing the same type of reaction this time around.
 
"[This suggests] the complex remains vulnerable from the physical side as well."
 
The gold price is now "near the lows of the year," says David Govett at fellow brokers Marex Spectron, but "For the moment at least, I do think we have done enough.
 
"I now think we are moving into the good old summer lull. Overall direction will be sideways."
 
New curbs on gold bullion imports to India – where the Hindu calendar's Chaturmas will now keep gold demand low until September – cut legal inflows by 81% in June from May's record high of 162 tonnes, a government official told journalists today.
 
Sales are however "expected to go up again" because of the gold price, the official added.
 
"India's gold imports will be somewhat the same or slightly more for July," agrees Commtrendz Research's Gnanasekar Thiagarajan, quoted by Reuters, "as some bargain hunting interest was seen."
 
The Indian Rupee fell Monday to fresh all-time lows against the Dollar, reducing the gold price discount for buyers in the world's No.1 consumer market.
 
"The [Reserve Bank of India] is definitely concerned about Rupee weakness," says Nick Verdi at Barclays in Singapore.
 
Rather than intervening to support the Rupee with cash trades, however, "It will look to combat this mostly through verbal intervention," he reckons.
 
Meantime in Egypt, the 12th largest private gold consumer in 2012, the main stock market sank almost 3% as fighting continued after more than 40 supporters of ousted president Morsi were killed at the weekend.
 
"Tensions in Egypt put pressure on local [gold] demand," says German refining group Umicore in a quarterly trading update, "as some retailers started to think of closing their shops for fears of looting."
 
With the gold price now 36% below its Dollar record of September 2011, Russia's state treasury Gokhran – the official trader of gems and precious metals – is preparing to buy gold on the domestic market after a two-year gap, Reuters reports.
 
Invited to sell gold onto the open market when prices neared their 2011 peak, "We were forbidden to buy gold directly [from Russian miners]," a source tells the newswire.
 
"If we receive permission, we will be happy to start buying gold again," the source added.
 
Russia's central has continued to acquire gold bullion for its own reserves, adding more than 78 tonnes in the last 12 months and rising to 7th place amongst the largest nation-state holders.
 
Western Europe's central banks, in contrast, have so far sold only 4.3 tonnes of the 400-tonne limit set by their Central Bank Gold Agreement this year.
 
Running from September, the agreement was first signed in 1999 to cap erratic sales by European governments as the gold price sank to three decade lows.
 
"Gold prices are going to generally drop down throughout the year," reckons Société Générale's head of commodities research, Michael Haigh, speaking today at a media briefing in Singapore.
 
Pointing to possible "price hedging" by gold-mining producers, "They'll start selling into the market," Haigh warned, "which puts more downward pressure on gold prices."
 
SocGen's outlook for gold is in stark contrast to its broader view of the commodities "super cycle", which Haigh believes will continue for another 15-20 years thanks to "population and urbanization" in emerging Asian economies.
 
"But it's not going to be an upward price for all."
 
Forecast by many analysts to overtake India as the world's No.1 gold consumer in 2013, China imported its second greatest monthly volume of gold bullion through Hong Kong in May, data showed last week.
 
Through the first 6 months of the year, separate data showed Friday, gold bullion deliveries made to traders using the Shanghai Gold Exchange totalled 1058 tonnes.
 
That was precisely 50% of the 2012 full-year total.
 
The plunging gold price however saw shares in Zijin Mining – the largest gold miner in world No.1 mining nation China – today drop 11% after it forecast "very poor results, below expectations."
 
"The fact that the gold price has fallen is actually going to be very healthy," said gold-mining fund manager Evy Hambro of Blackrock to Bloomberg last week.
 
"We need to see costs taken out of the industry; we need to see the companies stop producing the ounces that don't make money and focusing on the ones that do."

By Adrian Ash
BullionVault.com

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

Formerly 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 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.

Adrian Ash Archive

© 2005-2014 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

Free Report - Financial Markets 2014