London Gold Market Report
from Adrian Ash
BullionVault
Tues 9 Apr, 08:55 EST
The PRICE of GOLD and silver was little changed Tuesday morning near last week’s finish,
while European stock markets rose but Japan’s Nikkei stalled its 5-day surge as the Yen
bounced higher from 4-year lows on the currency market.
Silver prices ticked higher to $27.40 per ounce, while gold regained $1574.
Energy and industrial commodity prices also edged higher. Major government bonds eased
back, nudging up the interest rate offered to buyers.
The US Treasury will this week auction $66 billion in new debt, according to Bloomberg
data.
“The [quantitative easing] actions of the Bank of Japan are having a profound effect on bond
yields,” notes the commodities team at Standard Bank today, “across especially emerging
markets.”
Because the BoJ’s promise of $1.4 trillion in new money creation by 2015 is weakening the
Yen, sats Standard Bank, “some gold-consuming countries, such as Thailand, [are] seeing
their currencies stronger against the Dollar.”
So “there’s been fairly strong gold buying interest from South East Asia…which should partly
offset the ongoing ETF liquidation.”
China’s net imports of gold through Hong Kong doubled in February from January’s 3-month,
new data showed today, rising to more than 60 tonnes.
New York’s $61-billion SPDR Gold Trust meantime ended Monday with the quantity of
bullion backing its shares unchanged from Friday’s new 21-month low of 1205 tonnes.
“Physical demand [has been] offset by professional investor liquidation,” says the latest
quarterly review from German refining group Umicore.
Swiss bank and major bullion dealer UBS today cut its average 2013 gold price forecast from
$1900 to $1740 per ounce.
“We continue to expect the price of gold to moderate over the year ahead,” says a note
from Australian retail bank NAB, forecasting a 2014 average of $1410 and citing economic
recovery and lower risks in the developed world.
“Partly offsetting this is our expectation for central bank purchases by the emerging
economies [plus] continued strong consumer demand from India and China.”
Germany’s Deutsche Bank today cut its 2013 price forecast by one eighth to $1637, saying
that the forces pushing gold prices higher over the last 10 years “have all moved into
reverse”.
Danske Bank analysts are more aggressive, cutting their 2013 gold price forecast below
$1500 and targeting $1294 per ounce for next year.
“Gold is in our view still in bubble territory,” they write, “despite the extended price drop
seen since the autumn [and] the signs of global currency war earlier in 2013.”
Commenting on the price action in gold, “I can say the chart doesn’t look good,” Reuters
quotes a Hong Kong trader at Lee Cheong Gold Dealers.
“I think $1585 is the crucial point. If it can break above this level, another bull run or short
covering will push up the market to $1600.”
Reviewing the relative moves in gold and silver meantime, “The gold/silver ratio’s
rally picked up the pace last week,” says technical analyst Axel Rudolph at Germany’s
Commerzbank.
The number of silver ounces you can buy with one ounce of gold “has so far reached 57.85,
a nine-month high,” Rudolph goes on. If the peak of 58.72 from June 2012 is broken, he
says, “the psychological 60.00 region will be targeted as well.”
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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market
for private investors online, where you can buy gold and silver in Zurich, Switzerland for just
0.5% commission.
(c) BullionVault 2013
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