Best of the Week
Most Popular
1.Gold Price Crash Through Key Support, Crude Oil in Freefall - Clive_Maund
2.Marc Faber Warns Japan's Bond-Buying Program is a Ponzi Scheme - Bloomberg
3.Silver Price and Powerful Forces - DeviantInvestor
4.Stocks Bear Market Catastrophe as Stocks Flash Crash to New All Time Highs - Nadeem_Walayat
5.Marc Faber Warns Not to Hold Any Gold in the U.S. - GoldCore
6.U.S. Housing Market San Francisco at Critical Mass - Harry_Dent
7.Global Scramble For Silver - Coins “Hard To Get,” “Premiums Likely To Jump” - GoldCore
8.Major World Stock Market Indices Analysis: SPY, QQQ, DAX, FTSE, CAC, HSI - Michael_Noonan
9.Japan's kaput?! - Axel_Merk
10.Tesco Empire Strikes Back, £5 off £40 Discount Voucher Spend Explained, Exclusions Warning! - Nadeem_Walayat
Last 5 days
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14
My Favorite Stock McDonalds Just Got Kicked Off My “Buy” List - 19th Nov 14
European Economies in Perpetual State of Shock, What's Scarier Than Deflation? - 19th Nov 14
Breakfast with a Lord of War and Nuclear Weapons - 19th Nov 14
The U.S. Economy’s Ebb and Flow - 19th Nov 14
What You Need to Know Before Investing in Alibaba - 19th Nov 14
Forget About Crude Oil Price Testing 2009 Low - 19th Nov 14
What Blows Up First? Part 5: Shale Oil Junk Bonds - 19th Nov 14
Bitcoin Price Did We Just See an Important Slump? - 18th Nov 14
How to Profit From Oversold Crude Oil Price - 18th Nov 14
Stock Valuations Outrunning Profits Growth - And the Band Played On - 18th Nov 14
ECB Buy Gold Bullion? Japan's Monetary Policy Dubbed "Ponzi Scheme" - 18th Nov 14
Gold, Silver, Crude and S&P Ending Wedge Patterns - 18th Nov 14
How High Could USD/JPY Go? - 18th Nov 14
On Obama and the Nature of Failed Presidencies - 18th Nov 14
Globalism Free Trade Immigration Connection - 18th Nov 14
An Epiphany From Hell - Buy Gold and Silver - 18th Nov 14
Too Difficult to Get a U.S. Home Loan - 18th Nov 14
Has the Gold Bear Trap Been Set - 18th Nov 14
Gold Price and Miners Soar on Huge Volume - 17th Nov 14
Cameron Says Second Global Economic Crash is Loomin, Japan in Recession - 17th Nov 14
How to Play the Stock Market 2014 Year-End Rally - 17th Nov 14
What The Fed Has Wrought, Who Needs Wage Earners Anyway? - 17th Nov 14
Stock Market Indexes Fluctuate Along Record Levels - Will Uptrend Continue? - 17th Nov 14
Stock Market Trend Deceleration Tends To Precede Corrections - 17th Nov 14
Stocks Bull Market Set to Continue After Consolidation - 17th Nov 14
The World Is Run By Fools, And We Let Them - 17th Nov 14
Gold Price Golden Bottom? - 17th Nov 14
Gold Dragons Grand Strategy - 16th Nov 14
Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - 16th Nov 14
Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - 16th Nov 14
Stock Market Inflection Point - 15th Nov 14
Gold And Silver – A Change In Suppressed Down Trend? - 15th Nov 14
Gold Market Capitulation? Not Likely - 15th Nov 14
The Most Valuable Stock Market Investment Secret of All - 14th Nov 14
Gold Stocks Apocalypse - 14th Nov 14
The Looming Uranium Crisis: Strategic Implications for the Colder War - 14th Nov 14
Stealth QE4 - Operation Tokyo Twist as Japan Sacrifices Pensions Funds - 14th Nov 14
My Secret Gold Strike Investing Strategy - 14th Nov 14
The Return of the U.S. Dollar - 14th Nov 14
Why Lower Crude Oil Prices Won’t Kill the Renewable Energy Boom - 14th Nov 14
The "Financial Mass Destruction" Investing Play Is All Upside - 14th Nov 14
Hyperinflation in the U.S.? - 14th Nov 14
Stock Market Year End Rally - 14th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Dramatic Stock Market Selloff

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