Gold Falls Then Ticks Higher – Spain and Italy 10 Year Over 7% and 6%

Today’s AM fix was USD 1,623.50, EUR 1,284.52, and GBP 1,035.20 per ounce.
Friday’s AM fix was USD 1,619.00, EUR 1,289.83, and GBP 1,044.65 per ounce.

Silver is trading at $28.50/oz, €22.64/oz and £18.25/oz. Platinum is trading at $1,492.50/oz, palladium at $626.75/oz and rhodium at $1,215/oz.

Gold rose $1.90 or 0.12% on Friday in New York and closed at $1,626.20/oz resulting in a 2% gain for the week.  Gold initially rose and then fell in Asia. However, gold has made a quick recovery (low $1,616/oz) and is holding its ground above $1,620/oz.


Cross Currency Table – (Bloomberg)

Gold took a tumble for the first time in 7 sessions in Asia as Antonis Samaras, leader of the Greece’s New Democracy Party (pro-bailout) was victorious.  Today, Samaras plans to form a coalition with other parties backing the bailout – meaning that Greece’s future in the euro is secure – for now. 

Gold’s dip in Asia was thought to be due to profit taking and increased risk appetite after the Greek election. However, this increase in risk appetite has been quite short lived with Spanish and Italian 10 year bonds again coming under pressure resulting in record Spanish yields over 7.13% and Italian 10 year over 6% again.

Initial gains in equity markets have subsided and the lessening of risk appetite is seeing gold supported.

Greece’s exit from the Eurozone is no longer a short term risk however it remains a real risk as does the risk of financial contagion in the Eurozone due to insolvent banks in Spain, Italy and France.

Some investors are waiting for a policy statement release from the US Fed after their 2 days of meeting concludes on Wednesday. Further QE is inevitable and if this is signalled gold should react very positively and we could see a sharp move up as was seen last July and August (see chart).


XAU/USD Daily – (Bloomberg)

When an earlier round of quantitative easing was announced in November 2010, it pushed gold to a record high as more money was pumped into the financial system. 

Gold is expected to benefit from strong support at $1,610 and especially $1,604, Societe Generale said in a note today as reported in the Reuters Global Gold Forum. Resistance is set to kick in around $1,632 then at $1,637/oz.

OTHER NEWS
(Bloomberg) — Gold Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended June 12, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 132,315 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 3,451 contracts, or 3 percent, from a week earlier. 

Gold futures rose this week, gaining 2.3 percent to $1,628.10 a troy ounce at today’s close. 

Miners, producers, jewelers and other commercial users were net-short 158,790 contracts, an increase of 2,668 contracts, or 2 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.


Currency Ranked Returns – (Bloomberg)

(Bloomberg) — Silver Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended June 12, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 9,609 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 185 contracts, or 2 percent, from a week earlier. 

Silver futures rose this week, gaining 0.9 percent to $28.74 a troy ounce at today’s close. 

Miners, producers, jewelers and other commercial users were net-short 17,919 contracts, an increase of 1,394 contracts, or 8 percent, from the previous week. 

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) — Mexico $121 Billion Pension Funds Can Invest in Commodities
Mexico’s pension funds, the nation’s largest institutional investors, will be allowed to invest in most commodity-linked securities starting June 20 as regulators seek to allow them to diversify investments.

The pension funds, known as Afores, will be able to invest in commodity futures, options and swaps contracts, Mexico’s central bank said in guidelines published in today’s official gazette. About $9 billion in pension assets will be eligible to invest in commodities, according to Bloomberg calculations.

Mexican pension funds, with 1.68 trillion pesos ($121 billion) under management, have been able since December to invest from 5 to 10 percent of some portfolios for younger workers in commodity-linked securities. The Afores had mostly allocated their holdings to the country’s debt markets.

Afore Banamex, Mexico’s largest pension fund, plans to “gradually” invest as much as 2 percent of total assets in commodities, said Luis Sayeg, the chief executive officer of the bank’s pension unit. The fund will hire a third-party asset manager for such investments, he said in a June 11 interview.

Mexico’s central bank authorized investments for commodities from milk to oil. The Afores will also be able to invest in indexes linked to such securities, the gazette said.

Afore Banamex manages 289 billion pesos ($22.5 billion), according to data from the country’s pension regulator.

Barclays Plc, BlackRock Inc., Schroders Plc and Deutsche Bank AG are among asset managers that were waiting for the final guidelines to enter formal talks with different Afores.

(Bloomberg) — India Cuts Benchmark Import Price for Gold to $524 Per 10 Grams
India cut the benchmark price for gold imports to $524 per 10 grams from $531 set on June 7, according to a statement from the finance ministry.

The benchmark price for imports of silver was raised to $938 per kilogram, the ministry said. The benchmark prices are used to set the tax in precious metal imports.

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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