Daily Market Update

Russia, Turkey And France Among 15 Central Banks Buy Gold In July

Friday’s AM fix was USD 1,374.50, EUR 1,028.59 and GBP 880.30 per ounce.

Yesterday was the Summer Bank Holiday in the UK.

Today’s AM fix was USD 1,411.00, EUR 1,057.80 and GBP 909.38 per ounce.

Gold rose $6.10 or 0.44% yesterday, closing at $1,402.40/oz, above resistance at $1,400/oz. Silver rose another $0.32 or 1.3%, closing at $24.30, above resistance at $24/oz.

Gold has broken above resistance between $1,400/oz and $1,407/oz this morning.

Gold is being supported by central bank gold buying and very weak U.S. data yesterday. Further support is coming from concerns about emerging market currencies and increasing geopolitical risk due to tensions between the U.S. and Russia over Syria.

Oil climbed on concern that unrest in the Middle East may disrupt supplies through the Iranian controlled Straits of Hormuz which would lead to safe haven gold buying.

Orders for long lasting U.S. manufactured goods recorded their biggest drop in nearly a year in July and a gauge of planned business spending on capital goods also fell sharply, casting further doubts over the still sickly U.S. economy.

Other data for July has also been poor showing the very fragile nature of the U.S. economy amid a still dire fiscal position. The Obama administration warned Congress again yesterday that the United

States could run out of dollars to pay its bills soon after mid-October, if lawmakers do not move swiftly to raise the limit on government borrowing.

Indian gold futures surged another 2% to hit a new record high as the rupee fell to a new record low.

Central Bank Gold Buying 1970 to Today – (Bloomberg)

Technical analysts say that gold’s break above $1,400 an ounce on Monday for the first time since June 7, in conjunction with its break above the 100 day moving average and a bullish "cup and handle" chart pattern, suggest more gains are in store for gold which may have bottomed out two months ago on June 28.

France, Russia and Turkey were among 15 central banks who added gold to their foreign exchange reserves in July, IMF data showed today.

Russia expanded their gold reserves for a 10th straight month in July. Russian holdings, the seventh-largest by country, gained another 6.3 metric tons to 1,002.8 tons.

Kazakhstan’s reserves also rose for a 10th straight month to 1.1 tons to about 132 tonnes. Azerbaijan added 2.009 tonnes to bring its holdings to 10.023 tonnes in July.

Turkey lifted its gold holdings by 22.5 tonnes, the biggest increase seen among 15 central banks. Turkey now has the world’s 11th-largest gold reserves as its holdings rose to 464 tonnes in July from 441.5 tonnes in June. The country’s central bank last year allowed commercial banks to hold a portion of their lira reserves in gold.

France bought 1,000 troy ounces of gold. The Bank of France has made a few such purchases in recent months. Analysts are unsure as to why the French central bank bought the gold but it may have been due to a Bank of France gold coin offering.

Cross Currency Table – (Bloomberg)

Mozambique, Guatemala, Kyrgyz Republic, Kazakhstan and Azerbaijan were some of the other countries who diversified into bullion.

Mexico, Denmark and Canada were among those that sold some gold in small quantities. Mexico reduced its holdings for a 15th month to 123.8 tons, according to the data.

Gold holdings by central banks are keenly watched since they as a group became net buyers in 2010 following two decades of being net sellers.

The global economic crisis since 2008 has led to resurgent official sector interest in gold which seems set to continue for the foreseeable future. Central banks are diversifying their assets amid a mounting, long term, concerns about fiat currencies, particularly in emerging markets.

Demand from central banks and global coin and bar demand is helping to counter the record outflows from ETF products seen this year. Central banks added 534.6 tons to gold reserves in 2012, the most since 1964, and may buy a similar amount again this year.

Gold rose 70% from December 2008 to June 2011 after the Lehman Brothers collapse led to the U.S. Federal Reserve pumping more than $2 trillion into the financial system by purchasing U.S. “risk free” government debt and due to the continuing Eurozone debt crisis.

There are real and valid concerns from investors and savers internationally regarding currency debasement and the risk that runaway inflation may eventually take hold.


Gold Futures Hit Record High – Reuters

Gold Swings Near Two-Month High as Investors Weigh Fed Stimulus – Bloomberg

Gold price crosses $1400 – Mining Australia

Gold rises amid Syria fears, September jitters – CNBC


That’s The Bottom For #Gold – MoneyWeek

Alice in Wongaland UK Economy – Max Keiser

Geopolitical Risk Good For Gold, Silver, Notes Commerzbank – Barrons

Developing Crisis in the Developing World – When the Hot Money Leaves – Dollar Collapse

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Mark O'Byrne
Executive Director


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