Gold’s London AM fix this morning was USD 1,642.50, EUR 1,251.24, and GBP 1,015.90 per ounce.
Yesterday’s AM fix was USD 1,652.50, EUR 1,257.71 and GBP 1,020.44 per ounce.
Silver is trading at $30.49/oz, €23.31/oz and £18.92/oz. Platinum is trading at $1,559.00/oz, palladium at $661.90/oz and rhodium at $1,350/oz.
Gold fell $8.10 or 0.49% in New York yesterday and closed at $1,653.60/oz. Gold has been slowly falling off in Asian and early European trading where it is down some $10 on the New York close.
Gold has been under pressure in Asia and Europe despite very disappointing economic data further igniting concerns about global growth and the debt crisis.
Cross Currency Table – (Bloomberg)
Gold continues to trade in a range between $1,600/oz and $1,700/oz. Support for gold is at $1,624/oz and resistance is at $1,670/oz and $1,680/oz (see chart below).
Technically, the narrowing range would suggest that a close below or above these levels could see a sharp follow through move down or up. Fundamental demand especially from central banks such as Russia (see below) and from store of wealth buyers in the Middle East and Asia mean that any decline will likely be shallow and the likelihood is of a break out to the upside.
Investors await the European Central Bank decision at 2.30pm CET. Market watchers will take interest in the ECB President and Vice-President’s explanation of the Governing Council’s monetary policy decisions and answers to journalists’ questions.
Continuing ultra loose monetary policies and negative real interest rates in the Eurozone mean that the euro (€1,251/oz) will continue to decline against gold.
European investors and savers need to protect themselves from the risk of euro and currency devaluations by having an allocation to gold.
Gold 6 Month Chart – (Bloomberg)
The dollar’s recent strength remains primarily because worries about the eurozone financial crisis have been become paramount which is limiting concerns about the US recovery – for now. The stronger dollar is weighing on commodities and may be impacting on the precious metals as well.
While gold has been correlated with riskier assets such as equities in recent weeks, it remains a safe haven asset and currency and further financial, economic and geopolitical uncertainty will support gold.
Swiss Gold Stored Internationally – SNB Will Not Disclose Where
There are increasing calls in Switzerland for transparency regarding the location of the remaining Swiss gold reserves. The Swiss National Bank said overnight that it keeps its gold in “decentralized” locations, according to Walter Meier, a spokesman for the Swiss central bank as reported by Bloomberg.
The SNB has also sold a large part of the Swiss gold reserves in recent years.
There are deepening concerns in Switzerland about the debasement of the Swiss franc. The SNB has pegged the franc to the euro and is engaged in the same ultra loose monetary policies as the Federal Reserve, BOE and the ECB. The SNB won’t allow the franc to rise above an arbitrary “ceiling” against the euro Walter Meier himself said on April 5 that the SNB is ready to buy foreign currencies in "unlimited quantities."
Meier’s comments regarding the vastly depleted Swiss gold reserves came after Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, called on the SNB to disclose where its gold is stored, in a letter published in the respected Swiss publication Finanz und Wirtschaft.
Meier said that the SNB holds its physical gold reserves “domestically and internationally, with provisions for a crisis scenario being a main factor in the decision for this decentralized storage”.
“The criteria for the storage countries are: appropriate regional diversification, exceptionally stable economic and political environments, immunity for central bank investments, access to a gold market where stocks could be liquidated if necessary,” he continued.
He concluded by saying that “such a decentralized storage is still preferable to an exclusive storage in Switzerland. The listed factors can change over time and that’s why the central bank is reviewing and adapting the storage locations periodically.”
The SNB’s monetary policies have been imprudent in recent years and their gold sales have lost the Swiss people a lot of money.
Switzerland holds 1,040.1 metric tons of gold, accounting for about 19% of its total reserves, according to the World Gold Council. This is down from 2590 tonnes prior to the SNB gold sales which began in 1999. The sale of Swiss gold reserves has cost the Swiss people some $50 billon.
Swiss GDP was $523 billion in 2011 so the SNB has lost some 10% of Swiss GDP from the sale of a large part of their national patrimony – their vitally important gold reserves.
Many Swiss people are concerned that their remaining gold reserves may be stored in foreign jurisdictions (possibly less safe than Switzerland) which could nationalise or expropriate their reserves in the event of some form of financial or economic collapse or currency crisis.
Hence, increasing calls of transparency regarding the locations of their gold and calls for the gold to be stored in Switzerland.
Russian Gold / FX Reserves Rise To 523.3 Billion
Russia’s gold and foreign exchange reserves rose to $523.3 billion in the week to April 27 from $519.5 billion a week earlier, central bank data showed on Thursday.
The central bank provided the following figures (in billion dollars):
Latest week 523.3
Previous week 519.5
The reserves include monetary gold, special drawing rights, reserve position at the IMF and foreign exchange.
Russia’s continues to diversify its reserves and aggressively accumulate gold bullion.
Russia Gold Reserves In Millions of Ounces – IMF via Bloomberg
As of 03/31/2012, Russia had increased its reserves to 28.7999 million ounces. Russia held 26.08 million ounces a year ago on 03/31/11. Therefore this is an increase of 10.43% in the last 12 months alone.
The risk of geopolitical tensions spilling over into currency wars remains high.
(Reuters) – Turkish gold imports rose to 7.78 tonnes in April from 2.91 tonnes in March,
according to data released by the Istanbul Gold Exchange on Wednesday.
In 2011 as a whole, imports amounted to 79.70 tonnes, almost doubling from 42.49 tonnes a year earlier.
(Reuters Global Gold Forum) – CME notifies members of its clearinghouse that starting Monday, members will need to effectively double the initial margin collected for non-hedge trading positions, with no exception for members’ customer accounts. The move is required by CFTC as part of Dodd-Frank, while market participants have known about it for some time, CME apologized Wednesday for the "short notice" of the change. As per CFTC rules, hedges must reduce risk for commercial users of derivatives markets, linked to such a company’s assets or liabilities.
(PTI) — ING Vysya Bank enters gold coin retailing
Private sector lender ING Vysya Bank today entered the gold coin retailing segment, announcing its plans to sell 24-carat coins of up to 10 grams.
The coins will be imported from Switzerland and be sold at the Bangalore-headquartered bank’s 149 branches nationally, it said in a statement issued here.
The coins will be offered in denominations of five grams, 8 grams and 10 grams and will be sold based on international bullion rates, it said.
Outlining the bank’s rationale for entering the fray, which already has a majority of lenders operating, the bank’s country head for retail banking Uday Sareen said, "Gold as an asset class is a key alternate investment avenue for individual investors and also acts as a natural hedge against other asset classes. We have been seeing tremendous demand for this product."
India is the highest consumer of the yellow metal, accounting for 20 percent of the world’s market. According to the World Gold Council, the country imported 966 tonnes of gold in 2011.
(Bloomberg) — Open Interest for Palladium Options Climbs to Record on May 1
Open interest for palladium options traded on the New York Mercantile Exchange climbed to a record 12,166 contracts yesterday, surpassing the previous record of 11,816 on April 25, CME Group Inc. said in an e-mailed statement.
(Bloomberg) — iShares Silver Trust Holdings Dropped 14.6 Metric Tons Yesterday
Holdings in the iShares Silver Trust dropped 14.61 metric tons yesterday to 9,537.53 tons, according to data on the company’s website.
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Gold Standard for All, From Nuts to Paul Krugman – Bloomberg
Gold Slips In Asia; ECB Meeting, US Data Eyed – Wall Street Journal
Gold, silver extend losses in Asian trade – MarketWatch
Russian Gold / FX Reserves Rise To $523.3 bln – Reuters
Gold Bull’s Long Term Trendline – The Indispensable Chart – Jesse’s Café Américain
Hugh Hendry On Europe "You Can’t Make Up How Bad It Is" – Zero Hedge
Preparing for a Lengthy and Unpredictable US Dollar Crisis – The Daily Reckoning
Russell – A Chapter of the World Has Come to an End – King World News
Brewing a Conflict with China – Foreign Policy Journal