Gold Falls Again on Options Expiry –Supported by Global Debt Crisis & Iranian Oil Jitters

Gold is trading at USD 1,696.10, EUR 1,252.60, GBP 1,083.30, CHF 1,546.20, JPY 130,370 and CNY 10,780 per ounce. 

Gold’s London AM fix this morning was USD 1,697.50, GBP 1,083.90, and EUR 1,253.14 per ounce.

Yesterday’s AM fix was USD 1,704.00, GBP 1,085.42, and EUR 1,266.44 per ounce


Gold in USD – 6 Months (Daily) and 2 Most Recent Gold Options Expiry (09/27/11 and Today) 

Gold is higher all currencies today and is up 1.2% in USD and 0.75% in EUR after yesterday’s 2% fall and there are renewed reports of physical buying activity in Asia.

Yesterday’s falls may been margin driven.  There has been liquidation by speculators and investors covering losses elsewhere due to the renewed market volatility and losses seen in equity markets globally in recent days.


Gold in USD – 30 Days (Tick)

Recent years have seen a trend of gold and silver selling off aggressively in the run into options expiries. This pattern has been less marked in 2011 but was more frequently seen in recent years.

Investors have complained to the CFTC about violations of law in the gold and silver markets and some have sued JPMorgan Chase & Co and HSBC Holdings Plc accusing them of conspiring to drive down prices, and reaping an estimated hundreds of millions of dollars of illegal profits.

The sell off had all the hallmarks of a bear raid by concentrated leveraged longs as the news flow was extremely gold positive – both from Europe and the US. 

This most recent sell off may again be completely coincidental but the CFTC might want to keep an eye on such unusual trends in the precious metal markets in order to ensure fair and free markets and protect the interests of all investors.

Such sell offs, whether manipulative and manufactured or not, should be used to accumulate physical bullion by buying on the dip.

The US Supercommittee’s abject failure to make any progress regarding the US budget woes yesterday is very bullish for gold.


Gold in USD – 1 Year (Daily) – 50, 100 & 144 DMA

Asian retail, high net worth and institutional buyers, and central bank buyers will take advantage of this latest correction and buy the dip as was seen in September.

Besides the ongoing global debt crisis, gold will also be supported by increasing geopolitical tension between Iran against Israel and its allies the US, Britain and Canada.

The US, Britain and Canada announced yesterday new sanctions on Iran’s energy and financial sectors.

Iran and its powerful ally Russia criticized the new Western sanctions imposed on Tehran saying they were illegal and futile.

The unilateral measures against Iran’s financial, petrochemical and energy sector sanctions were "unacceptable and against international law" according to Russia.

China had blocked any possibility of the steps going before the UN Security Council for approval. China is a major buyer of Iranian oil and a key investor that has stepped in to sign energy contracts left available by departing European companies.

Iran has warned it could close the strategic Straits of Hormuz if it became the target of a military attack. The straits are the entrance to the strategic Persian Gulf waterway, a major route for the supply of oil globally. 

Oil has risen for the first time in four days as the sanctions against Iran raise concerns that supplies may be disrupted. Prices have gained 7% this year after increasing 15% in 2010.

A disruption of Iranian oil supplies would lead to oil prices surging and to increased safe haven demand for gold.

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

SILVER
Silver is trading at $31.71/oz, €23.42/oz and £20.27/oz 

PLATINUM GROUP METALS 
Platinum is trading at $1,550.20/oz, palladium at $589.25/oz and rhodium at $1,575/oz. 

NEWS
(Bloomberg)
Gold Rebounds From One-Month Low as ETP Holdings Gain to Record

(Reuters)
Gold rebounds; Europe, U.S. debt worry weigh

(MarketWatch)
Gold futures rebound in electronic trading

(Reuters)
Russia Says New U.S. Sanctions on Iran ‘Unacceptable’

COMMENTARY
(CNBC)
Go for Gold: Cramer Bullish on Bullion

(ZeroHedge)
So, Wait, Gold Is NOT Outperforming Stocks By 23% YTD?

(KingWorldNews)
Turk – MF Global Disaster to Create Another Lehman Crisis

(KingWorldNews)
Embry – Get Ready for Extreme Money Creation Globally

(GoldSeek)
The New Price Era of Oil and Gold

(Market Oracle)
Euro-zone Will Print or Perish

(Nine News)
$200 Oil in 2012?‎

(Press TV)
China’s Banks Use Gold as Legal Currency

 

 

Mark O'Byrne

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