Gold’s Rally Short Term? Long Term Outlook Bullish

Today’s AM fix was USD 1,603.00, EUR 1,321.74, and GBP 1,034.26 per ounce.
Yesterday’s AM fix was USD 1,587.50, EUR 1,309.39 and GBP 1,024.86 per ounce.

Silver is trading at $27.79/oz, €22.77/oz and £17.89/oz. Platinum is trading at $1,416.00/oz, palladium at $570.75/oz and rhodium at $1,150/oz.

Gold climbed $22.20 or 1.04% in New York yesterday and closed at $1,604.50/oz. The silver price hit a high of $27.559 and finished the day with a gain of 1.3%.

Gold was trading sideways in Asia with a slight rise and fall before the open in European trading where gold is in a tight range of ($1,601-$1,608/oz).

 Gold Prices/Rates/Fixes /Volumes – (Bloomberg)

Gold ticked up again on Thursday, its 3rd session of gains, on investor hopes for additional stimulus packages to be released by central banks increased the yellow metal’s appeal as an inflation hedge. 

Gold’s recent rise was on the wave of Ewald Nowotny ‘s comments and hopes that the US would employ further action after their policy meeting next week.  

The UK’s growing recession which caused Moody’s to put their economic outlook to negative in February looks poised to lose their AAA status soon.  Britain’s 2nd quarter took a nose dive by 0.7% (far greater than Spain’s 0.4%).  

In the US, the Richmond Fed’s twin indices of manufacturing and services collapsed this month.  Some analysts say this data signals the events of a deep recession.  Figures show they have dropped at a faster pace than back in 2008.  Manufacturing activity dropped 16 points from -1 to -17.  This is devastating for blue collar workers in America’s heartland.  

Market watchers wait for further clues as traders see this as a short term rally.


Cross Currency Table – (Bloomberg)

There were no major alarm bells in terms of central bank gold purchases in June according to the IMF. The biggest buyer was Russia at 6.2 tons.  Germany sold 0.7 tons.  Mexico sold 0.1 tons.  Guatemala bought 0.2 tons.  June’s net purchases were 5.6 7 tons versus 57.8 tons in June 2011. This show’s a 38% drop in net purchases from central banks for the 1st half of the year in 2012 compared to last year. 

In Hong Kong they are completing work on its largest gold vault due to open in September which can hold 22% of the gold that is in the US facility Fort Knox.  

The new secure storage facility will compete with services set up by the Airport Authority Hong Kong in 2009 that serviced governments, commodity exchanges, bullion banks, refiners, wealthy individuals and exchange-traded funds.

The new facility is within the international airport compound and its capacity is 1,000 metric tons.

This signals the growing interest from China currently the world’s second largest consumer of gold in owning physical gold bullion.  

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

NEWS
Gold rises for 3rd day on stimulus expectations – Reuters

Citi sees 90 percent chance of Greece leaving the euro – Reuters

Gold eases after rallying on ECB stimulus talk – Reuters

COMMENTARY
Gold Shorts Getting Torched, Don’t Lose Your Position – King World News

Hong Kong’s Largest Bullion Vault Signals Rising Asia Wealth – Bloomberg

Germany Lowers Gold Holdings For First Time In Eight Months – Bloomberg

Newcrest output sinks 15% in gold’s record year – MarketWatch

 

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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