Gold’s London AM fix this morning was USD 1,580.75, EUR 1,221.69 and GBP 980.98 per ounce.
Yesterday’s AM fix was USD 1,590.00, EUR 1,228.37, and GBP 987.39 per ounce.
Gold rose $3.00 or 0.18% in New York yesterday and closed at $1,594.00/oz. Gold ticked lower in Asia and in Europe and breached yesterday’s intraday low of $1,580/oz.
Cross Currency Table – (Bloomberg)
A close below $1,580/oz could see gold test support at $1,523/oz and $1,533/oz – the lows in December and September 2011 respectively.
Gold fell after shares in Asia were hit by JPMorgan’s massive $2 billion loss, political turmoil in the euro zone and also by weak economic data from China. The JP Morgan loss may be higher than $2 billion and could lead to sharper sell offs in markets which could lead to further gold weakness.
However, the JP Morgan loss is gold positive as it shows how little reform there has been of Wall Street and the global financial system which continues to resemble a casino. It also shows that systemic risk remains.
Gold tracked equities lower despite the JP Morgan loss, deepening worries about Europe’s debt crisis, Chinese economy concerns and their impact on global economic growth.
Safe haven gold is again showing short term correlation with risk assets, with sell offs seen across risk assets such as equities, industrial metals and oil this week. It seems likely that some more speculative players are again selling gold on the COMEX to cover losses suffered in other markets.
Gold is set to fall by more than 3% this week, the deepest drop since early March, however there are technical and fundamental factors that suggest we may be near an intermediate low.
There has been far less selling of physical bullion this week and indeed a small degree of buying the dip.
In the physical market, weaker prices led to buying from Thailand, Indonesia and also main consumer India. Reuters reports that premiums for gold bars in Singapore edged up to $1.10 to spot London prices from $1.0 quoted on Thursday.
While gold prices have had 11 consecutive years of price gains one would not know it from the lack of popular media coverage (and often unbalanced and uninformed), and lack of participation on behalf of the western public.
Gold in Euros – Daily (1 Year)
However gold is set for a 12th consecutive year of gains as investor demand is likely to be spurred by unfolding eurozone sovereign debt crisis, according to the World Gold Council (WGC).
"We believe this will be the 12th year of a bull run by the end of this year," Marcus Grubb, managing director for investment at the industry funded WGC, told a news briefing.
Gold ‘Will Go To $3,000/oz’ – David Rosenberg
Highly respected economist and strategist David Rosenberg has told the Financial Times in a video interview (see below) that gold “will go to $3,000 per ounce before this cycle is over.”
Markets are repeating the downturns of 2010 and 2011 and it is time to search for safety, David Rosenberg of Gluskin Sheff tells James Mackintosh, the FT Investment Editor.
Rosenberg sees a “very good opportunity in gold” as it has corrected and seems to be “off the radar screen right now”.
He sees gold as a currency and says the best way to value gold is in terms of money supply and “currency in circulation.”
As the “volume of dollars is going up as we get more quantitative easing” he sees gold at $3,000 per ounce.
Mackintosh says that Rosenberg’s view is a “pretty bearish view”.
To which Rosenberg responds that it is “bullish view on gold and gold mining stocks.” Mackintosh says that it is “bearish on everything else”.
Rosenberg says that it is not about being “bullish or bearish,” it is about “stating how you view the world” and he warns that the major central banks are all going to print more money and keep real interest rates negative “as far as the eye can see.”
This is “critical” as one of the key determinants of the gold price are real short term interest rates.
The longer they stay negative “the longer the bull market in gold is going to be.”
Rosenberg sums up that “this is not about being bullish or bearish, it is about how do we make money for our clients.”
The interesting interview can be watched here.
OTHER NEWS
(Bloomberg) — Palladium Shortage Forecast to Run Through 2016, UBS Says
Palladium supply will lag behind demand for at least through 2016, with the shortage estimated at 714,000 ounces this year, UBS AG said.
Platinum will have a surplus of 143,000 ounces this year, Ben Davis, an analyst at the bank in London, said in a report today, citing the bank’s research from April. The platinum price forecast was raised to $1,700 an ounce for this year from $1,675 an ounce, he said, citing the April report.
Platinum and related metals will benefit in the second quarter from signs of growth in the U.S. and expansion in emerging economies, he said. The palladium price forecast was raised to $760 an ounce from $725 an ounce for this year, according to the report from April.
Gold in GBP – Daily (1 Year)
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NEWS
Gold Bull Run Set For 12th ConsecutiveYear – WGC
PRECIOUS – Gold heads for worst weekly fall since March – Reuters
Gold Bulls Weakest in Month as Investors Buy Dollar – Bloomberg
China’s Gold Demand Growth Seen Stagnating as Price Drops – Bloomberg
Gold rises amid bargain hunting – Sydney Morning Herald
COMMENTARY
Jim Grant: "The Gold Move Is Not Over" – CNBC
Oil, Gold Take Hits For Their Own Good – MarketWatch
Gold’s Setback ‘Barely Registers’ In Long View – King World News
Marc Faber Sees A 1987-Like Crash Approaching – Bloomberg
Is JPM Staring At Another $3 Billion Loss? – Zero Hedge
