Gold Gains As 14% Plunge Overdone – Speculators Sell, Central Banks To Buy

 

Today’s AM fix was USD 1,378.00, EUR 1,054.00 and GBP 900.48 per ounce. 
Yesterday’s AM fix was USD 1,416.00, EUR 1,083.31 and GBP 924.52 per ounce.

Gold fell sharply $131.10 or 8.81% yesterday to $1,357.00/oz and silver slid to $22.80 finished -12.69%.


Cross Currency Table – (Bloomberg)

Gold rebounded as store of value and diversificaiton buyers deemed a 14% plunge over two days to be excessive and an Asian central banker said that policy makers may take the opportunity to buy. 


Gold in USD, 1 Month – (Bloomberg)

Silver, platinum and palladium also advanced.  At 11.30am GMT silver is 23.44(+0.75), platinum is $1,438.00(+39.00) and palladium is $677.00(+26.00).

Prices fell 9.1% yesterday, the most since 1983, and have lost 28% since reaching a record in September 2011.


XAU/EUR, 1 Month – (Bloomberg)

Banks such as Soc Gen and Commerzbank have admitted that the sell was ovedone. 

Societe Generale SA said that the slump was overdone as quantitative easing, or QE, will continue.

“Everything isn’t looking that rosy, so gold should hold up,” said David Poh, Singapore-based regional head of portfolio-management solutions at Societe Generale Private Banking. “This tumbling over the past few days is overdone. We think a good time to accumulate is at the $1,300 level.”

The decline in prices would give central banks an opportunity to buy, Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said in an interview on Bloomberg Television today.


XAU/GBP, 1 Month – (Bloomberg)

The Bank of Korea said that bullion’s drop isn’t a big concern as the bank’s holdings are part of a long-term strategy for foreign-exchange reserves according to Bloomberg.

Bullion for June delivery was 1 percent higher at $1,374.70 an ounce on the Comex in New York after losing as much as 2.9 percent to $1,321.50. CME Group Inc. will increase margin requirements on gold trading, raising the minimum cash deposit for futures 19 percent to $7,040 per 100-ounce contract at the close of trading today, Chicago-based CME said in a statement.

Spot silver rallied 2.4 percent to $23.305 an ounce after losing 3 percent to $22.07, the lowest level since October 2010. Platinum climbed 2.8 percent to $1,442 an ounce, rebounding from $1,375.50, the cheapest price since December 2011. Palladium dropped as much as 1 percent to $647.25 an ounce, the lowest level since November, and then gained 3.8 percent to $678.

Gold’s drop was spurred by massive concentrated selling in the futures market and as speculators sold the metal to raise cash to cover other positions.

Holdings in the SPDR Gold Trust, the biggest ETP backed by bullion, fell to 1,154.34 tons yesterday, the lowest level since April 2010, data on the company’s website showed. That’s 15 percent, or 199 tons, below the peak reached in December. Holdings in all ETPs compiled by Bloomberg dropped 1 percent to 2,382.43 metric tons yesterday, the biggest loss since Feb. 21.

Smart money such as Bill Gross and Marc Faber have reiterated why they see gold as a long term buy and important diversificaiton for porfolios.

NEWS
Gold bounces off fresh two-year low – The Financial Times

Oil falls below $100 as gold ticks higher – The Telegraph

U.S. stock futures push higher as gold gains – MarketWatch

Gold Rout Heralds ‘Hot’ Indian Wedding Jewelry Season – Bloomberg

COMMENTARY
Falling knives aren’t worth the risk, even if they’re made of gold, analysts say – MarketWatch

Why Gold’s Tumble Won’t Save You Any Money at the Jewelry Store – Wall Street Journal

Gold is now in a bear market – is it time to sell? – Money Week

Faber: Gold Isn’t Down as Much as Apple – Bloomberg

Why Gold’s Tumble Won’t Save You Any Money at the Jewelry Store – Wall Street Journal

CME Hikes Gold, Silver Margins By 18.5% – Zero Hedge

 

Mark O'Byrne

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