ECB Keeps Rates At 1% – Gold Record High In Indian Rupees

 

Today’s AM fix was USD 1,633.25, EUR 1,305.45, and GBP 1,057.33 per ounce.
Friday’s PM fix was USD 1,606.00, EUR 1,292.76, and GBP 1,041.76 per ounce.

Silver is trading at $29.35/oz, €23.57/oz and £19.03/oz. Platinum is trading at $1,469.00/oz, palladium at $622.00/oz and rhodium at $1,200/oz.

The ECB has left its benchmark refi rate at 1.0% as expected. The deposit rates remains at 0.25 pct and the marginal lending rate at 1.75 pct and are thus both unchanged. 


Cross Currency Table – (Bloomberg)

An ECB rate cut would have had a negligible impact on the Euro crisis as monetary policy transmission has broken down. It would have helped debtors and mortgage holders especially in struggling periphery nations.

Ultra loose monetary policies risk stoking inflation and are harming already embattled savers and pension funds who are suffering from negative real interest rates.

Gold fell 0.12% or $2.00 in New York yesterday and closed at $1,618.40/oz. Gold crept gradually higher in Asia and then quickly jumped $10 at 0848 GMT as sizeable orders hit the market sending gold through recent resistance at $1,627/oz to over $1,637/oz.

While gold fell, silver managed to eke out a gain of over 1% or $0.31 and the mining shares rose by some 0.5%. 

Gold has surged to a record nominal high in Indian rupees overnight as the rupee continues to depreciate (see chart above).

Gold futures in India, the world’s second biggest bullion buyer after China, climbed as much as 0.6% to a record 30,192 rupees per 10 grams. The August-delivery contract on the Multi Commodity Exchange of India Ltd. traded at 30,181 rupees at 12:46 p.m. in Mumbai.


Gold in Indian Rupees – 1 Year (Daily)

Gold’s rally on Friday sparked scrap selling in India as some consumers took advantage of the higher prices to sell old jewelery. While Indian physical demand has fallen recently there continues to be strong investment demand in India as seen in the very high demand for ETF gold products.

Negative real interest rates and a depreciating currency mean that demand will continue in India – although it may decline from the records seen recently.

Gold’s record high in rupees will likely soon be seen in euros with gold at €1,308/oz now only 5% below the record high of September of €1,375/oz.


XAU/EUR Exchange Rate – (Bloomberg)

The recent strength of the dollar and the pound mean that nominal high’s in these currencies may be delayed for a while but seem likely prior to year end given gold’s very strong fundamentals.

OTHER NEWS
(Bloomberg) — Gold Futures in India Climb to Record 30,192 Rupees Per 10 Grams 
Gold futures in India, the world’s biggest bullion buyer, climbed as much as 0.6% to a record 30,192 rupees per 10 grams. The August-delivery contract on the Multi Commodity Exchange of India Ltd. traded at 30,181 rupees at 12:46 p.m. in Mumbai.

(Bloomberg) — South African Communists Oppose Nationalization, Times Says
The South African Communist Party is opposed to calls within the ruling African National Congress and its alliance partners, which include the SACP, for the nationalization of mines, Blade Nzimande, the party’s general secretary, told a National Union of Metalworkers of South Africa Congress, the Times reported.

The nationalization calls are not designed to spread the country’s wealth, he said. Instead they are an attempt to rescue black investors who have acquired stakes in struggling mines by taking advantage of the country’s empowerment laws, he said in Durban, the Johannesburg-based newspaper reported.

(Bloomberg) — Tanzania Gold Exports Rose to $2.3 Billion in Year to March
Gold exports from Tanzania, which vies with Mali to be Africa’s third-biggest producer of the precious metal, grew 35 percent in the 12 months through March even as the country’s trade deficit more than doubled, the Bank of Tanzania said.

Revenue from bullion shipments increased to $2.3 billion from $1.7 billion a year earlier, the Dar es Salaam-based central bank said in a statement published on its website today.

The deficit on the current account, the broadest measure of trade in goods and services, widened to $5.2 billion in the period from $2.4 billion previously, it said.

“This development was mainly driven by the rise in imports of goods, particularly oil, that outweighed the impact of an increase in exports,” the bank said in a statement today.

Imports of goods and services advanced 36 percent to $12.6 billion, while exports rose 12 percent to $6.9 billion, it said. Exports of commodities declined 5.5 percent as the value of cotton and tobacco shipments fell. Volumes of coffee and cashew nuts also fell during the period.

The reserves of East Africa’s second-biggest economy amounted to $3.5 billion, enough to cover 3.7 months of imports, while external debt stood at $10 billion, the bank said


XAU/USD Exchange Rate – (Bloomberg)

(Bloomberg) — Economist Dennis Gartman Says He’s Buying More Gold on Economy
Economist Dennis Gartman is adding to his gold holdings, he wrote today in his daily Gartman Letter.

“We wish this morning to buy yet another unit of gold and to sell yet another unit of equities,” Gartman wrote. “We’ve every expectation that the monetary authorities will, and indeed must, err on the side of further aggressive accommodation, which in the end shall benefit both gold and equities, but which in the short run shall benefit the former far more seriously than it shall benefit the latter.”

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NEWS

Gold rises as investors await ECB action – Reuters

Gold futures rally further in electronic trade – MarketWatch

Gold Bugs Defy Bear-Market Threat With Soros Buying – Bloomberg

Gold futures settle higher, fail to reclaim $1,620 – MarketWatch

US Mint Coin Sales Recover In May From April – Wall Street Journal

COMMENTARY
Why Physical Gold Outside The World’s banking System Is The Safe Place To Be – Barron’s

A Forgetful French Gold Bug Left Gold Bars Worth $250,000 In His Old Basement – Business Insider

War is America’s New Economic Stimulus Policy – MarketWatch

U.S. can’t audit gold without revealing its importance and the tricks played with it – US News & World Report

Record low rates encourage fat and lazy Uncle Sam – TD Waterhouse

The End of the Euro: A Survivor’s Guide – Minyanville

From Negative 5Y5Y To $2200 Gold?  – Zero Hedge

Stephen Flood

Stephen Flood is the CEO of GoldCore. He is a former Wall Street equity trader and FinTech expert. He has been involved in the precious metals markets since 2004 and has appeared as an expert contributor on CNBC, CNN, BBC, RTE & Bloomberg TV and has had articles published in the Irish Times, Irish Independent and The Sunday Business Post.

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