London Gold Market Report
from Ben Traynor
BullionVault
Thursday 22 November 2012, 07:00 EST
THE U.S. DOLLAR gold price traded close to $1730 an ounce during Thursday morning’s London session, holding onto gains made a day earlier, as European stock markets edged higher, with US markets closed today for Thanksgiving.
“We believe that the German Bundesbank’s sale of 4.2 tonnes of gold was intended solely for producing commemorative coins,” says today’s commodities note from Commerzbank, referring to International Monetary Fund figures published Wednesday showing October’s buying and selling of gold by central banks.
“By its own account, the Bundesbank keeps 7 tonnes of gold ready each year for the production of coins, gold which it sells to Germany’s Federal Ministry of Finance. In October 2011, the Bundesbank had sold 4.7 tonnes of gold for this purpose.”
Silver hovered below $33.50 an ounce this morning, like gold holding gains from Wednesday, as oil prices ticked lower and copped gained.
Industrial demand for silver is forecast to rebound next year following an estimated 6% drop in 2012, according to a report by precious metals consultancy Thomson Reuters GFMS published by the Silver Institute.
“This will owe much to a new peak in China,” the report says, “while a jump in the Indian market will see the country post its second highest total on record.”
Industrial demand accounted for more than half of total silver demand last year, with that share projected to grow to around 60% in 2014, according to GFMS.
China’s manufacturing sector has shown improved activity this month, according to the provisional release of HSBC’s purchasing managers index published Thursday. HSBC’s flash PMI rose 50.4, up from 49.5 a month earlier, with a figure above 50 indicating an expanding sector.
In Europe meantime, flash PMI data published by Markit show improved manufacturing conditions in both Germany and the Eurozone as a whole this month, although the sector PMIs remains below 50.
Increasing the European Union’s budget would be “quite wrong” said British prime minister David Cameron this morning as he arrived in Brussels ahead of a summit that will see discussions of the EU’s budget over the rest of this decade.
Cameron’s coalition government lost a parliamentary vote at the end of last month when members of his Conservative party joined opposition Labour in backing calls for an outright cut in the EU’s budget rather than just a freeze.
“[Cameron’s] people expect the impossible,” says Tim Bale, professor of politics at Queen Mary University of London.
“That’s the problem, they want him to fail. They don’t want him to bring back the deal that can possibly be done, because that will prove [Britain] can’t deal with the EU and the only solution is to get out of it.”
The Euro extended yesterday’s gains this morning following reports that Euro members could contribute an additional €10 billion to temporary bailout fund the European Financial Stability Facility in order to fund Greece while it waits for international lenders to agree payment of its latest tranche of bailout funding.
Argentina meantime must $1.3 billion to hedge funds that did not agree to the country’s sovereign debt restructuring in 2001, a US court ruled Wednesday.
Judge Thomas Griesa has issued an injunction against Argentina, adding that this extends to “other persons who are in active concert or participation with the parties or their agents.”
This includes Bank of New York Mellon, which is trustee for Argentina’s restructured debt, and extends to the US payments system, the Financial Times reports.
A ship from Argentina’s navy was seized in Ghana last month following an application by a subsidiary of US hedge fund Elliot Capital Management, one of the holdouts from the 2001 default.
India’s government is examining the creation of financial investments linked to gold, such as gold-backed bonds, the Hindustan Times reports.
“Recent [central bank] data showed a declining trend of savings by Indian households including bank deposits,” an official from India’s finance ministry said, “[so] in order to attract household savings, paper products that are linked to gold [should] be developed.”
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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. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+
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