Gold’s London AM fix this morning was USD 1,622.50, EUR 1,239.21, and GBP 1,022.82 per ounce. Yesterday’s AM fix was USD 1,631.75, EUR 1,239.65 and GBP 1,027.75 per ounce.

Silver is trading at $31.36/oz, €24.00/oz and £19.80/oz. Platinum is trading at $1,595.75/oz, palladium at $635.80/oz and rhodium at $1,350/oz. 

Cross Currency Table – (Bloomberg)

Gold fell $27.90 or 1.69% in New York yesterday and closed at $1,618.40/oz. Gold ticked higher in Asia prior to further slight gains in Europe.

Gold dropped to its lowest level since January but remains higher on the year. It is poised for its first lower weekly close since mid March adding to the poor technical picture.

The very poor Spanish debt auction and renewed concerns about the euro zone debt crisis has led to another sharp bout of risk off in global markets. Euro zone concerns and concerns that cheap money and QE policies may end saw world stocks (MSCI World) fall 1.9% while gold fell 1.7% yesterday.

European indices are lower again today on renewed risk aversion. 

Commodities fell too yesterday. Platinum for July delivery fell $61.90, or 3.7%, to $1,598.60/oz. Palladium for June delivery fell $26.85, or 4.1%, to $632.75/oz and copper for May delivery fell 12.85 cents to $3.7905 a pound.  U.S. crude oil fell $2.54, or 2.4%, to finish at $101.47 a barrel in New York. 

Comments from ECB President Mario Draghi that the euro zone’s growth economic outlook is subject to downside risks related to the debt crisis and inflation upside risks were gold bullish. 

It sounded if the ECB President is concerned about and warning about stagflation in the Eurozone.

This and concerns about the possible abandonment of QE led to hedge funds, traders and more speculative players selling many of their positions and again piling into the perceived safety of US Treasuries and the US dollar.

Gold 1 Year Chart – (Bloomberg)

Gold’s short term correlation with equities and commodities has been seen frequently in recent months and years with gold falling in unison with riskier assets in the initial stages of sell offs and at intermediate stock market highs. However, what has happened subsequently is that gold has fallen less than equity and commodity markets and then recovers faster and rises again soon after short periods of correction and consolidation.

We expect this pattern to be seen again. While gold’s sell off has been sharp, the charts below put them into context and should help create perspective.

Gold, Silver, S&P, DJIA, US 10 Year – YTD

The GoldCore trading desk was unusually busy yesterday with a large percentage of clients selling their bullion holdings including some quite large sell orders. It could be indicative of a bottom as there has been capitulation by weak hands concerned about the recent price fall.

Despite a recent decrease in physical demand both from Asia and in western markets, the fundamentals driving the market have not changed and will be supportive. Demand has abated after the record levels of demand seen at the height of the Greek debt crisis in November and December.

However, this demand will likely return in the coming months when Spain, Italy and potentially the UK, Japan and US all experience similar debt crises.

Gold, Silver, S&P, DJIA, US 10 Year – 1 Year

Risk adverse investors and the prudent should maintain a “buy and hold” strategy and should continue to accumulate on the dip.

Jim Rogers “I Will Buy More” Gold – Still Long Term Bullish
The smart money continues to accumulate gold and silver on the dip.

Investor Jim Rogers, chairman of Rogers Holdings, said he remains bullish on gold and silver in the long term and he “will buy more” on price weakness.

Rogers predicted a global commodities rally and the gold and silver bull markets in 1999. He also predicted much of what has transpired in financial markets in recent months and years and has consistently warned about the risks posed to the US dollar and other fiat currencies.

In the short term he is not so optimistic about gold and silver prices. “I expect the price to decline and when that happens I will buy more,” Rogers said at a conference in Bucharest yesterday.

He recently said that he would buy gold at $1,600/oz and would increase position by even more at $1,500/oz – reiterating that gold is going much higher in the coming decade.

Rogers did not elaborate, nor was he asked, how much higher, but he said in November 2011 that gold “will easily go to $2,000 but it will reach $2,400 over the course of the bull run, which has years to run.”

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OTHER NEWS
(Bloomberg) — Jim Rogers Plans to Buy More Gold, Silver, Sees Falling Prices 
Investor Jim Rogers, chairman of Rogers Holdings, said he’s “not so optimistic” about gold and silver prices.

“I expect the price to decline and when that happens I will buy more,” Rogers said at a conference in Bucharest today.

Silver dropped as much as 4.2 percent today and gold declined 2 percent after the Federal Reserve signalled it may refrain from more monetary stimulus. The dollar rose as much as 0.6 percent against a basket of six currencies, curbing demand for precious metals as an alternative investment.

Today’s declines pared gold’s gain for this year to 3.4 percent and silver’s advance to 13 percent. Rogers predicted a global commodities rally in 1999.

(Bloomberg) — Ex-Official Vavilov to Form Russia’s First Gold ETF, RBC Reports
Russia’s former Deputy Finance Minister Andrei Vavilov may become the country’s first businessman to create an exchange-traded fund backed by physical gold supplies, RBC Daily said.

Vavilov plans to deposit gold bullion in Zurich or London banks and trade the derivatives on them on the Irish stock exchange and Moscow’s Micex-RTS exchange, the newspaper said, citing unidentified people familiar with the plan.

(Bloomberg) — Top 10 Gold-Mining Countries in 2011, According to CRU (Table)
Following is a table of the world’s 10 biggest gold-producing countries ranked by 2011 output, compiled by London-based metals-consulting company CRU. Figures are in metric tons.

Country                         2011 Output     2010 Output

1.  China                           380             341

2.  Australia                     272             260

3.  U.S.                              243             236

4.  South Africa               221             209

5.  Russia                         205             197

6.  Peru                            156             163

7.  Ghana                         102              92

8.  Canada                        101              91

9.  Indonesia                      97            128

10. Mexico                         82              72

World Production        2,789         2,638

(Bloomberg) — Vietnam State “Monopoly” on Gold Trade to Enter Force May 25
Vietnam’s Prime Minister Nguyen Tan Dung approved a regulation giving the state a “monopoly” on the trade and production of gold bullion from May 25, according to a statement posted on the government’s website today.

Under circular 24, dated April 3, domestic gold businesses will only be able to produce and sell jewelry, and will have to re-register with the central bank in the next six to 12 months.

NEWS
Gold plunges to its lowest level since January – Business Week

Gold Traders Bearish for First Time in 2012 – Bloomberg

GLOBAL MARKETS-World stocks, gold drop on less hope of Fed help – Reuters

Americans brace for next foreclosure wave – Reuters

COMMENTARY
Is This The End Of The Gold Rush? – Business Week

Gold’s Bearish Knife Is White Hot – The Street

Gartman: Selling Gold Wrong and Ill-Advised –CNBC

Fleckenstein – The Fed is Trapped, Stock Market & Gold – King  World News

Second Foreclosure Tsunami Coming, About To Kill Any Hopes Of "Housing Bottom" – Zero Hedge