Daily Market Update

2012 Gold Estimates Lowered By Banks – But Remain Bullish

Gold’s London AM fix this morning was USD 1,657.00, GBP 1,077.09, and EUR 1,290.80 per ounce.

Yesterday’s AM fix was USD 1,662.00, GBP 1,080.34, and EUR 1,299.76 per ounce.


Cross Currency Table – Bloomberg 

Spot gold has swung between a low of $1,645/oz and a high of $1,660/oz in Asian and early European trading after rising another 1.25% yesterday. Gold spiked above €1,300/oz on continuing concerns about the Eurozone and the euro.

The yellow metal climbed to $1,667.90 yesterday its highest since December 13th and an increase of 6.7% in 2012, as the dollar fell. The dollar’s weakness was attributed to poor US production and homebuilder data combined with Greece announcing it is nearing a deal on its debt. Prime Minister, Lucas Papademos is resuming private talks with the bondholders today.

Portugal will test investor appetite as it launches its debt auction today. Concerns about financial stability in Hungary and contagion risk in the Eurozone continue.

India raised its tax on imports of gold bars and coins (2%) and silver (6%) yesterday. This is a 90% increase on gold and double the previous amount charged on silver. Traders and analysts do not think that the increase will have an effect on the strong demand from Indian consumers. The increase in duty is not that large in rupee terms given the strong rise of gold in rupees in recent years. 

Current weakness in the market provides another buying opportunity and is a good time to accumulate a position for the long term.


Gold Spot (Euros) €/oz  – Daily 1/18/11-1/18/12 – Bloomberg

The world’s biggest primary silver miner, Fresnillo, had flat silver production in 2011. Output is only expected to remain stable in 2012. 

African Barrick Gold said on Wednesday fourth quarter gold production fell 11% and missed its annual production targets.

Despite price rises seen in 2011, gold and silver mining is remaining static contrary to claims by gold bears that higher prices would lead to increased production and therefore increased supply.

Geological constraints may be impacting mining companies ability to increase production of the precious metals.

Standard Bank has said it lowered its average 2012 gold price forecast by 6 percent to $1,780 an ounce, but continues to expect prices of the precious metal to touch new highs in the latter half of this year.   

"We maintain that gold will reach new highs this year but, given our dollar view, we believe that these highs will be reached only in the second half of 2012," the analyst said in a note. Standard Bank expects the U.S. dollar to gain strength, especially against the euro, over the next quarter. 

A few other banks have recently lowered price forecasts for gold, including ANZ and Credit Suisse – however the majority remain bullish on gold’s outlook for 2012.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
(Bloomberg)
Gold Climbs for Third Day as Dollar Weakens on Optimism Over Economic Data

(Reuters)
Gold off one-month high; euro zone eyed

(Financial Times)
Central banks increase gold lending

(International Business Times)
Turkey Adds 63 Tonnes of Gold Due to Acceptance of Metal as Reserve Requirement from Banks

(Economic Times)
Government changes import duty on gold to 2% of value, silver to 6%

COMMENTARY
(ZeroHedge)
World Bank Cuts Economic Outlook, Says Europe Is In Recession, Warns Developing Economies To "Prepare For The Worst"

(KingWorldNews)
Von Greyerz – Silver Shortages & Gold to Accelerate Higher

(FoxNews)
Ron Paul gives new life to an old issue: Gold Standard

(The Underground Investor)
Gold & Silver Banker-Cartel Prolonged Price Suppression Has Set the Foundation for an Explosive Move Higher in 2012

(The Market Ticker)
MF Global: There Is NEVER Only One….

(The Telegraph)
Hungary faces ruin as EU loses patience

 

 

 

 

Mark O'Byrne
Executive Director

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