Gold’s London AM fix this morning was USD 1,652.50, EUR 1,257.71, and GBP 1,020.44 per ounce.
Yesterday’s AM fix was USD 1,661.25, EUR 1,253.02 and GBP 1,024.70 per ounce.
Gold fell $4.40 or 0.26% in New York yesterday and closed at $1,661.70/oz. Gold rose to over $1,670/oz in early US trading prior to selling capped price gains and the price then fell back to the $1,660/oz level.
Gold gradually fell during trading in Asia and this weakness has continued in European trading where gold looks set to test the $1,650/oz level or $1,646/oz, the price low after the $1.24 billion sell trade on Monday.
Cross Currency Table – Bloomberg
Gold’s weakness yesterday may have been due to the positive manufacturing data in China and the US leading to traders being hesitant to commit to the long side.
The slowdown in demand from India and data showing holdings in ETFs dropped to the lowest level in 3 months and US Mint monthly gold coin sales fell in April falling to the lowest level since June 2008 may have may have also tempered enthusiasm.
However, central bank demand is likely to be continuing at these levels and central banks are almost certainly still buying on the dips. Bullion coin and bar demand and ETF demand is likely to pick up in the coming weeks when the global debt crisis deteriorates again.
Data from Europe this morning was very negative with Italian industrial production (PMI) falling off a cliff, German manufacturing shrinking, Irish exports faltering on slower global growth, the Greek economy still floundering and Spanish unemployment figures appalling.
The Chairman of the White House Council of Economic Advisers, Alan Krueger, said yesterday that the European crisis poses “some risk” to the US and global economy. Four US central bankers said that more stimuli probably won’t be needed. The Fed bought $2.3 trillion of bonds in two rounds of so-called quantitative easing from December 2008 to June 2011 thereby debasing the dollar.
HSBC Securities on April 29 downgraded its forecast for average gold prices this year to $1,760/oz from $1,850/oz, with analyst James Steel citing “a steep reduction in market expectations of further quantitative easing or other monetary stimulus.”
America’s “Safest Long Term Investment” Is Gold – Gallup
Americans feel “gold is the safest long term investment” today, a Gallup survey has found.
Gold was favoured over four other types of investments perceived as the best long term choice for American investors today.
28% of the American public choose gold as their favoured investment of choice today.
Gold in USD – 3 Days (3 Minute) – Bloomberg
Real estate followed in second place, with 20% seeing it as the best long term investment.
Paper assets were less popular with savings accounts and certificates of deposits (CDs) tied with stocks and mutual funds at 19%.
Bonds came last at 8%.
This suggests that the American public may not be as uninformed when it comes to investing as is often suggested.
According to Gallup, "investing in gold has gained in popularity in recent years as low interest rates have made traditional savings instruments less attractive, and instability in the stock and real estate markets has undermined the mass appeal of those options."
"Meanwhile, the rising trajectory of the price of gold over the past several years apparently offers more of the returns and stability investors seek."
While some may find the Gallup poll findings worrisome from a contrarian perspective, it is not.
Gold ownership remains very low amongst the public in most of the western world.
The poll’s findings suggest that this may change in the coming months and years.
While surveys often show that people are favourably disposed towards and instinctually trust gold, there remains a massive lack of knowledge about how to “invest in” or buy gold for financial insurance reasons. This lack of knowledge and awareness leads to the low levels of gold ownership in the western world today.
Gold in USD (White), EUR (Orange) and GBP (Yellow) YTD – Bloomberg
The non-specialist financial media continues to rarely, if ever, cover gold. When it does cover gold it is often in a negative light – with frequent suggestions that it is a “bad investment” and a “bubble”. Also, gurus or experts are often allowed to voice their negative opinions on gold without seeking plurality of opinion and getting the other side of the argument.
There are rarely comprehensive articles looking at the best, most cost-effective and safest ways to own gold as there are with other asset classes such as bank deposits, bonds and equities.
This will change in the coming years when there is less of a bias against gold and a realisation of the importance of gold as a diversification, and gold is treated and covered in the same way that equities, bonds and cash are covered today.
(Reuters Global Gold Forum)
It looks like some appetite for gold coins has returned in the United States, with 10,000 ounces of American Eagle gold coins sold on May 1, according to the U.S. Mint. That’s already half the total amount recorded for the whole of April (though that was the weakest month in nearly four years).
(Bloomberg) — India’s April Gold Imports Plunge to 30-35 Tons, Group Says
Gold imports by India, the world’s biggest bullion buyer, plunged to 30 metric tons to 35 tons in April from 90 tons a year earlier after higher import taxes weakened demand, an industry group said.
Demand remains dull in India as prices trade near record levels due to a decline in the local currency, Prithviraj Kothari, president of the Bombay Bullion Association, said in a phone interview today. Imports in 2012 are expected to be 700 tons to 750 tons, he said.
(Bloomberg) — Comex Suspended Gold Trading in N.Y. Yesterday After Price Drop
CME Group Inc.’s Comex halted trading in gold futures for about 10 seconds yesterday at 8:31 a.m. after prices declined, said Damon Leavell, a spokesman in New York. The so-called Stop Logic halt, engineered by the exchange, is designed prevent excessive price movements, according to the Comex website. Gold futures for June delivery, which settled 60 cents lower at $1,664.20 an ounce yesterday, dropped about $14.50 shortly before 8:30 a.m. local time, data compiled by Bloomberg show.
The market was given a short period of time to regain its equilibrium, Leavell said in a telephone interview. CME declined to comment on the size of the trade that led to the halt.
“The stop-logic functionality happens across all markets at different times and can even happen several times in a day,” he said.
Comex halted trading after Comex recorded a transaction of 7,500 gold futures during one minute of trading, Dow Jones reported earlier.
(Bloomberg) — BNP Paribas Lowers 2012 Gold Forecast to $1,715 an Ounce
BNP Paribas SA lowered its 2012 gold forecast by $140 an ounce to $1,715, according to an e-mailed report from the bank today. It cut its silver estimate for this year by $4.40 an ounce to $33.10.
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Gold Weakens as Manufacturing Data Improves – Business Week
Gold extends losses in electronic trading – MarketWatch
HSBC lowers 2012 gold forecast 5% to $1,760/oz – MarketWatch
Hillary Clinton’s Headaches Are Waiting in China – Bloomberg
Total US Debt Soars To 101.5% Of GDP – Zero Hedge
Embry – This is What I’m Doing with My Own Money Right Now – King World News
The “Mistake of 1937” – GoldSeek