Gold’s London AM fix this morning was USD 1,629.50, EUR 1,240.20, and GBP 1,007.54 per ounce. Yesterday’s AM fix was USD 1,642.50, EUR 1,251.24 and GBP 1,015.90 per ounce.
Silver is trading at $29.99/oz, €22.93/oz and £18.60/oz. Platinum is trading at $1,533.50/oz, palladium at $657.40/oz and rhodium at $1,350/oz.
Gold dropped $16.50 or 1.00% in New York yesterday and closed at $1,637.10/oz. Gold gradually traded lower in Asia and in European trading.
Gold is down 1.6% on the week. The gold market has seen peculiar, lack lustre, low volume trading this week punctuated with sudden, oddly timed, very large sell orders. This leads to quick price falls followed either by slow, gradual recovery or a sharp bounce, prior to next bout of strangely timed sudden large sell orders.
This was clearly seen by the mysterious and massive $1.24 billion ‘Goldfinger’ trade on Monday.
While the $1.24 billion trade on Monday was attributed to a “fat finger” or algo trading in the gold market, there was a similar spike in volume at exactly the same time in silver – while all other markets saw little price movements.
There have been a few instances of this and it was seen yesterday again around 1330 GMT when there was a large 3,000 plus lot gold sell order which saw the price quickly fall by over $5 before a rapid recovery. Volume that size is unusual for that time of the day on the COMEX.
Yesterday the silver pits again suddenly saw the sale of some 200,000 lots in a minute or two that knocked the most-active SI future back a few cents (see chart below) and this led to silver breaching the $30/oz mark later in the session.
It is unusual to see a market building momentum in a certain direction and then to see massive sell orders in both the gold and silver market which then lead to further tech selling which can feed on itself.
At the same time there appear to be eager buyers at these levels who continue to accumulate on the dips. Ultimately prices will be dictated not by strange and potentially manipulative trading on the COMEX but by the global supply and demand of physical bullion.
Gold’s weakness may also be due to short correlations with equity markets – which have come off due to investor jitters after recent poor data and ahead of the US payrolls report.
Market expectations for Friday’s non-farm payrolls report have fallen this week, with dealers now expecting that the economy added 125,000 to 150,000 jobs in April, below the previous Reuters consensus forecast of 170,000. Investors are expecting more lacklustre job growth last month following a trail of weak U.S. indicators.
A poor jobs number should lead to gold moving higher as it will lead to concerns about the US economy and concerns that QE3 will be launched leading to the further debasement of the dollar.
The European Central Bank kept rates steady at 1% as expected by market watchers. The euro faces additional risks on Sunday from elections in France and Greece which could create further disruption in the Eurozone about their countries commitment to fiscal austerity.
Euro gold is consolidating between €1,150/oz and €1,400/oz (see chart below). Given the terrible economic mess that Europe finds itself in, it seems only a matter of time before gold reaches €1,400/oz again and there is of course the risk of the euro falling by much more against gold.
Gold a Bubble? “More People That Own Apple Stock Than Gold”
Respected investment fund manager and author of the ‘Gloom, Boom & Doom Report’ has advised buying gold again and says that 25% of a portfolio should be in precious metals.
He says another move to the downside of gold is possible, but worldwide printing of money assures long term support.
Swiss born and educated Marc Faber’s contrarian voice is common on CNBC and Bloomberg TV when it comes to big-picture macro forecasting and an astute historical perspective. However, outside of the specialist financial media his astute historical perspective remains relatively unknown.
Interviewed at his residence in Hong Kong by Hard Asset Investor, Faber made the excellent point that the majority of the investment public continues not to own gold. Especially, when compared to say one popular tech stock – such as Apple.
Faber said that he attends lots of conferences and usually asks the audience, “How many of you own gold?” Normally, hardly anyone owns it. I’ve been to conferences with thousands of people attending, and nobody owned any physical gold.”
Faber believes that this shows that gold is not a bubble.
“When you went to an investment conference in 1989, everybody owned Japanese stocks. And in 2000, everybody owned tech stocks. That is the bubble, when the majority of market participants own an asset. I think there are more people that own Apple stock than gold.”
Faber points out that while the price of gold has risen by quite a lot in the last 13 years (from $252/oz in 1999), the debt situation of the western world has deteriorated dramatically.
“People say the price of gold is in a bubble stage and it is up substantially from the lows in 1999, which was, at the time, around $252 per ounce. But at the same time, we had an explosion of debt, not just government debt, but private sector debt, and an explosion of unfunded liabilities such as in the pension fund industry, and not just with Medicare, Social Security and Medicaid.”
“So now, 12 years after the gold’s low, we are essentially in a situation where maybe the price of gold should be much higher because the economic and financial conditions are worse than they were 12 years ago.”
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(Bloomberg) — RBS Lowers 2012 Gold Price Forecast by $25 to $1,725 An Ounce
Royal Bank of Scotland Group Plc lowered its 2012 gold price forecast by $25 to an average $1,725 an ounce.
Central banks by the end of 2015 will have bought 1,050 metric tons of gold, on top of 455 tons in 2011, the largest purchase since 1964, Nick Moore, head of commodity research, said in an e-mailed report today. “Gold remains attractive to investors, given continued economic uncertainties and its near 15 percent retracement from its record high,” he said.
(Bloomberg) — Silver Falls to $29.8675 in London, Lowest Price Since Jan. 18
Silver for immediate delivery declined to $29.8675 an ounce by 9:15 a.m. in London, the lowest price since Jan. 18.
(Bloomberg) — Russia’s Palladium Sales May Drop by Half This Year, GFMS Says
Russian state stockpile sales of palladium will probably drop to about 400,000 ounces this year, from about 800,000 ounces in 2011, Philip Klapwijk, global head of metals analytics at Thomson Reuters GFMS, said today in a presentation in London.
(Bloomberg) — Palladium Stockpiles are About 11.5 Million Ounces, GFMS Says
Palladium stockpiles equal about 11.5 million ounces globally, according to Thomson Reuters GFMS.
“That is still a bit of an overhang,” Philip Klapwijk, global head of metals analytics at the researcher, said in a presentation today in London.
(Bloomberg) — U.S. Mint Gold-Coin Sales in May Match April Total Sales
The U.S. Mint’s sales of American Eagle gold coins have reached 20,000 ounces so far in May, according to figures from the Mint’s website. That matches the total sales for April.
(PTI) — Gold at life-time high of Rs 29,695
Gold prices today rose to all-time high of Rs 29,695 per 10 grams in the bullion market here as investors shifted funds from melting equity markets to the precious metal, considered as a safe-haven investment.
Gold closed higher by Rs 35 at Rs 29,695 per 10 grams over the previous close.
Silver, however, lacked necessary follow up support and declined by Rs 400 to Rs 56,200 per kg on reduced offtake by industrial units.
Traders said gold raced to record high levels as stockists and retail customers preferred to park their funds in the precious metal amid weak stocks and forex markets.
Gold of 99.9 and 99.5 per cent purity rose by Rs 35 each to new peak level of Rs 29,695 and Rs 29,555 per 10 grams respectively. Sovereign remained steady at Rs 23,750 per piece of eight grams.
On the other hand, silver ready remained selling pressure and lost Rs 400 to Rs 56,200 per kg and weekly-based delivery by Rs 375 to Rs 56,710 per kg.
Silver coins continued to be asked at last level of Rs 66,000 for buying and Rs 67,000 for selling of 100 pieces.
(Bloomberg) — Shanghai Exchange to Start Silver Futures Trading From May 10
The Shanghai Futures Exchange, China’s biggest metals bourse, will offer silver futures from next week after draft contract rules received a positive response from potential investors, according to an executive.
The yuan-denominated contract will start on May 10, with the new product helping producers to control their risks, Vice President Huo Ruirong said at a briefing today. Each contract will represent 15 kilos, according to the exchange website.
While silver is used in industrial processes, including the manufacture of solar panels, it’s also bought by some holders as an investment to protect against inflation. Spot prices in dollars rallied 83 percent in 2010 before dropping last year.
“Being the world’s largest silver producer and user, China’s introduction of a silver futures contract will add one more tool for its local industry to better manage the risks associated with price volatility,” Fu Peng, chief macro-economy consultant at Galaxy Futures Co., said by phone from Beijing.
The country produced more than 12,000 metric tons of silver last year, Fu said. It consumed more than 8,000 tons, of which about 40 percent was accounted for by investment demand in the form of coins and bars, he said.
Spot silver traded at $30.4075 an ounce at 5:15 p.m. in Beijing after declining 27 percent over the past year. The metal will trade at $34 an ounce this year, according to the median of analysts’ forecast tracked by Bloomberg.
The new product will be in addition to a silver contract for deferred delivery, or the so-called silver T+D contract, traded on the Shanghai Gold Exchange, Fu said. That’s offered in minimum lots of 1 kilogram.
“Given the contract size difference, we reckon that most retail investors may still prefer trading in the silver T+D contract, while institutional investors, such as users and miners, might want to try out the new contract,” Fu said.
(Bloomberg) — Standard Chartered Betting on Palm Oil Drop, Is Positive Gold
Standard Chartered Plc is betting palm oil prices decline going into the third quarter because of a “seasonal downward bias.”
Standard Chartered has one gold futures contract for December delivery that it expects will gain because of the European debt crisis and possible monetary easing. “Our target of $1,925 an ounce for gold December 2012 futures has been buffered by headwinds from gold’s correlation to the dollar,” Standard Chartered said. “Despite this, exchange traded fund flows have not turned very bearish over the past month, and we have also seen some central bank buying.”
(Bloomberg) — Barrick’s Munk Predicts ‘Major Switch’ in Gold-Equity Valuations
Barrick Gold Corp. Chairman Peter Munk said gold prices will continue their upward trend and there will be a “major switch” in the valuation of companies that produce the metal. He spoke today at Barrick’s shareholder meeting in Toronto.
Gold near 1-week low ahead of US jobs data – Reuters
Marc Faber: Inept Central Bankers Will Keep Long-Term Gold Prices High – Hard Assets Investor
Our Central Bankers Are Intellectually Bankrupt – The Financial Times
Swiss National Bank has lost 10% of GDP in Gold Trade – For Sound Money
The Gold Market’s Steep Wall of Worry – MarketWatch
Smelting the Family Silver – Business Week