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Gold Consolidating Over €1,200/oz As Spanish 10 Year Hits 6.15%


From GoldCore:

Gold’s London AM fix this morning was USD 1,648.25, EUR 1,266.03, and GBP 1,040.69 per ounce. Friday’s AM fix was USD 1,670.50, EUR 1,269.86 and GBP 1,048.91 per ounce.

Silver is trading at $31.48/oz, €24.16/oz and £19.87/oz. Platinum is trading at $1,571.50/oz, palladium at $638/oz and rhodium at $1,350/oz.


Cross Currency Table – (Bloomberg)

Gold fell $19.10 or 1.14% at the close in New York on Friday and closed at $1,656.10/oz. Sharp and rapid falls on high volume were seen in the last few minutes on the COMEX. The sell off was unusual with some 10,000 contracts worth some $1.5 billion traded and there were no corresponding moves in foreign exchange, equity, bond or commodity markets.


Spain 10 Year Bond – 2 Years (Daily)

The weakness seen on the Friday COMEX close continued in Asia when gold fell to as low as $1,640.50/oz prior to a slight bounce on European trading.

While gold fell 1% on Friday, bullion still managed to record a 1.7% weekly rise in dollars and similar gains in other fiat currencies.  It was gold’s biggest one week gain since late February. This was important from a technical point of view and could lead to further gains this week.


XAU/EUR 2 Year Weekly Currency Chart – (Bloomberg)

Gold’s 1% drop overnight comes despite the continuing rise in Spanish, Italian and Portuguese bond yields. Spanish bonds fell sharply this morning with the 10 year yield rising to over 6.15% (see chart).

There is the slow realisation that the complacency of recent months was again misplaced. It remains obvious that the euro zone debt crisis is far from over and this will support gold in the coming months – especially in euro terms.

Gold in euro terms has been consolidating above €1,200/oz for six months now. With the eurozone crisis set to deepen and the continuing risk of contagion, we could see gold break out in euro terms prior to doing so in dollars, pounds and other currencies.


XAU/EUR 15 Year Monthly Currency Chart – (Bloomberg)

Gold in sterling terms has had a similar period of consolidation above £1,000/oz (see chart below) and with the UK economy struggling and negative real interest rates set to remain, sterling will continue falling against gold in the medium and long term.

Increasing signs that the Chinese and US economic recoveries are very shaky is beginning to weigh on market sentiment which should also contribute to safe haven demand resuming.

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OTHER NEWS
(Bloomberg) — Gold Supported by Low Real Rates, Haven Demand, Citigroup Says
Gold prices should remain supported given low real interest rates and demand from central banks and other investors for the metal as a haven and source of liquidity, according to Citigroup Inc.

“However, price action could be volatile as markets are caught between changing inflation and monetary policy expectations, political turnover and sudden demand for liquidity,” analysts including Edward L. Morse and Heath R. Jansen wrote in a report today.

The bank raised its 2012 gold forecast to $1,718 an ounce from an earlier call of $1,709. It lowered its 2013 bullion estimate to $1,835 an ounce from $1,912, and increased its 2014 target to $1,725 an ounce from $1,610.

(Bloomberg) — Citigroup Bearish on Copper, Silver; Bullish Gold, Nickel, Palladium
Citigroup Inc. said it’s bearish on copper and silver and expects prices for industrial commodities to remain “range bound” medium-term and be driven by “supply shocks” and higher costs rather than demand.

“The conviction calls, relative to the forward curve, are in palladium, nickel, and gold on the bullish side and copper and silver on the bearish side,” Citigroup analysts led by Edward Morse said in a report today.

(Bloomberg) — Bank Asya Expects to Double Gold Deposits, Haberturk Reports 
Asya Katilim Bankasi AS, an Istanbul-based Islamic bank, expects its gold deposit accounts to double by the end of this year, Haberturk newspaper reported, citing Chief Executive Officer Abdullah Celik.

The bank, also known as Bank Asya, currently has 1 ton of gold stored in such accounts and plans to pay a profit-share to attract more customers, Celik said, according to Haberturk. Profit share is a mechanism used by Islamic lenders that corresponds to interest payments.

Bank Asya’s accounts allow customers who keep gold at home to store it on deposit, and the bank charges a 1 percent commission that is much lower than typically levied by jewellers, Haberturk quoted Celik as saying.

Bank Asya is looking forward to proposed legislation that will allow Turkey’s government to sell sukuk, or Islamic bonds, the newspaper quoted Celik as saying. That would create opportunities for the bank to sell its own sukuk domestically and abroad, Celik said.


XAU/GBP 1 Year Currency Chart – (Bloomberg)

(Bloomberg) — Gold Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended April 10, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 136,653 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 5,112 contracts, or 4 percent, from a week earlier.

Gold futures rose this week, gaining 1.8 percent to $1,660.20 a troy ounce at today’s close.

Miners, producers, jewelers and other commercial users were net-short 171,049 contracts, down 6,415 contracts, or 4 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) — Silver Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended April 10, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 18,186 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 1,869 contracts, or 9 percent, from a week earlier.

Silver futures fell this week, dropping 1.1 percent to $31.39 a troy ounce at today’s close.

Miners, producers, jewelers and other commercial users were net-short 26,386 contracts, down 4,950 contracts, or 16 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) – Schroders Trims Gold Positions, ‘Will Maintain’ An Allocation
Schroders Private Banking trimmed its gold positions and will maintain an allocation to the metal, Robert Farago, head of asset allocation at the bank, said in a report e-mailed today.

(Bloomberg) – Bank of France Didn’t Buy, Sell Gold in 2011, Noyer Says
The Bank of France didn’t buy or sell gold in 2011, Governor Christian Noyer said today as he presented the bank’s annual report in Paris.

NEWS
Gold extends losses on dollar; platinum slides? – Reuters

Gold futures decline as dollar strengthens? – MarketWatch

Stretched Britons begin stampede for stamps – Reuters

Euro Area Seeks Bigger IMF War Chest on Spanish Concerns – Bloomberg

COMMENTARY
Turk: Some Answers to Doug Casey’s Questions – Free Gold Money Report

Bryan – Suspicious $1.5 Billion Gold Dump & Bank Runs – King World News

Financial Instability For (Keynesian) Dummies – Zero Hedge

Fix income inequality with $10 million loans for everyone! – Washington Post

Gold and Silver Heading for New Highs This Year – Market Oracle

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