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Gold down 2 pct, below $1,600 on euro bailout doubts
* Gold falls toward 2012 lows on doubts over Greek bailout
* Sharp losses in equities, commodities pressure bullion By Frank Tang
NEW YORK, May 8 (Reuters) - Gold fell more than 2 percent toward this year's lows on Tuesday, briefly breaking below $1,600 an ounce as questions over whether Greece will obtain a bailout and the broader euro zone debt crisis triggered a technical sell-off.
Bullion, which has largely failed to rally on economic uncertainties this year, is on track for its biggest one-day drop in more than two months. Analysts said political uncertainty in Greece and a change of French presidents had investors questioning whether Europe would come through with the billions of euros needed to bail out its troubled economies.
" Absent new monetary stimulus, gold doesn't make sense. As people are fearful of the fiat currencies eroding their wealth, that's when gold catches its bid," said Jeffrey Sherman, commodities portfolio manager of the $33 billion asset manager DoubleLine Capital.
Spot gold dropped 2.4 percent on the day to $1,598.81 an ounce by 11:30 a.m. EDT (1530 GMT), having earlier hit a low of $1,594.94 an ounce, which marked the cheapest price since Jan. 4.
U.S. gold futures for June delivery were down $39.80 at $1,599.30 an ounce in heavy trade, with volume set to be the strongest in more than a month.
" The fact that support has been broken on a daily, weekly and monthly time frame suggest that this sell-off could get worse," said Adam Sarhan, CEO of investment research and consultant Sarhan Capital.
Sarhan said gold was already testing the lows of 2012 when Tuesday's heavy losses sent the metal below heavy daily and weekly support between $1,620 and $1,630 an ounce as well as its 18-month upward trendline on monthly charts.
Silver was down 2.5 percent on the day at $29.26 an ounce. On platinum group metals, platinum fell 1.4 percent on the day to $1,500.49 an ounce, while palladium slid 3 percent to $622.69 an ounce, in line with sharp losses in other industrial commodities such as crude oil and copper.
Morning Gold & Silver Market Report – 5/8/2012
By Ryan SchwimmerMay 8, 2012HEDGE FUND MANAGER: BEWARE ‘TAXMAGEDDON!’
Precious metals and stocks across the globe are trading lower this morning amid the renewed concerns in Europe. Mike McCudden of Interactive Investor explained, “With the sight of yet more roadblocks on the road to recovery for the euro zone, investors hoping for some positive surprises from the French and Greek elections have been left largely disappointed.” Concerns in Europe have brought the euro’s value down, and precious metals seem to be reacting to that development.
One hedge fund manager is predicting tough times ahead for stocks, which could be positive for gold and silver, considering the negative correlation the metals historically hold to stocks. Referring to the Federal Reserve’s “Operation Twist,” he says that “the Fed has effectively found a way to keep long-term interest rates low … and cleverly engineered another bull rally (for stocks). … The U.S.A. will have to start dealing with issues that some market participants refer to as Taxmageddon.” “Taxmageddon” is the term being given to the coming months before the U.S.A. presidential election, when many decisions on tax breaks are due.
At 10:10 a.m. (EDT), the APMEX precious metals spot prices were:
- Gold – $1,603.80 – Down $36.30.
- Silver - $29.37 – Down $0.79.
The Countdown To The Break Up Of The Euro Has Officially Begun
Francois Hollande, the new French president, has declared that the financial world is his " greatest enemy" . Read More
The Federal Reserve Is Under The Gun & Gold - Caesar Bryan
“We may be coming to a point where gold, which has been pretty quiet in terms of volatility, begins to move. Read More
Gold under pressure from euro China, India demand helps
SINGAPORE, May 8 (Reuters) - Gold held steady on Tuesday as
a backlash by voters in Greece and France against austerity
measures continued to weigh on the euro, while upbeat prospects
for demand in India and China, the world's top two gold
consumer, lent some support to prices.
FUNDAMENTALS
* Spot gold was little changed at $1,637.49 an ounce
by 0100 GMT.
* U.S. gold traded nearly flat at $1,638.10.
* Hong Kong shipped 62,907 kilograms of gold to mainland
China in March, up nearly 59 percent on the month, said the Hong
Kong Census and Statistics Department.
* Gold imports by India, the world's biggest buyer of
bullion, could rise on pent-up demand from jewellers after the
federal government decided to scrap an excise duty on jewellery
it imposed in March, the head of a trade body said on Monday.
* The euro edged lower, extending losses from the previous
session after elections in France and Greece cast doubts on the
political will and commitment to austerity measures seen crucial
to tackling the euro zone debt crisis.
* The dollar, U.S. Treasuries and German Bunds have become
the safe haven of choice among investors during the political
upheaval in Europe.
* German industrial orders shot up in March with foreign
demand coming almost exclusively from non-euro zone nations,
highlighting Germany's resilience to the debt crisis but also
its increased reliance on markets outside the bloc.
MARKET NEWS
* Investors brushed off Europe's election results, as the
S& P 500 rebounded from early losses to end nearly unchanged on
Monday.
* U.S. crude futures were barely changed in early trade on
Tuesday, with oil investors awaiting U.S. crude inventory data.
DATA/EVENTS
1000 Germany Industrial output mm Mar
1145 U.S. ICSC chain stores yy Weekly
1255 U.S. Retail sales Weekly
1400 U.S. IBD/TIPP consumer confidence index May 1400 U.S. ISM semi-annual economic forecasts
Closing Gold & Silver Market Report - 5/7/2012
By Brandi BrundidgeMay 7, 2012‘GOLD BUGS’ FAVOR THE PRECIOUS YELLOW ASSET
Investors are aware that Gold is a safe haven, but Warren Buffett, a well-known American business magnate, has made it apparent he does not invest in Precious Metals. However, Michael Pento, founder of Pento Portfolio Strategies, gave some interesting facts regarding why “Gold bugs” are choosing the alternative asset rather than following advice from Warren Buffett or Bill Gates. Pento said, “The stock market has gone nowhere in nominal terms in 12 years. It makes sense as a default under the current conditions of negative real interest rates to own something that keeps you afloat, that preserves your purchasing power. I would ask Mr. Buffett if he could own a lone share of a representative of the S& P 500, or would he rather have the equivalent of an ounce of Gold? Which investment has done better over the last dozen years? The answer is clear: Gold.”
Gold production in China has continued to increase, and that country likely will be the world’s biggest Gold market in 2012 as physical demand persists. According to the World Gold Council, China’s Gold consumption in 2001 was 203.1 tons, and in 2011 the amount had more than tripled to 769.8 tons, showing the economy is expanding with a market interested in Gold. The Chinese people are encouraged to purchase Gold for retirement savings, said Zhang Jianhua of the People’s Bank of China. “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign exchange portfolio and purchase Gold assets when the Gold price shows a favorable fluctuation,”' Jianhua said.
The outcome of elections in Greece was chaotic, sparking several protests. Investors have found this as a buying opportunity for the euro, because it is possible that Greece may be compelled to leave the union, thereby causing the euro to strengthen. “Long term, a Greek exit would be bullish for everyone,” said Mitch Goldberg, president of ClientFirst Strategy. “Germany will support Greece to make the transition as smooth as possible. The best way to strengthen a chain is to remove the weakest link.”
At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold - $1,639.90 - Down $6.30.
- Silver - $30.12 - Down $0.36.
Mid-Day Gold & Silver Market Report – 5/7/2012
By Nicholas WilseyMay 7, 2012GOLD TAX REMOVED IN INDIA FED STILL OPEN TO EASING
With the Gold price slightly down, that Precious Metal is in need of a pick-me-up. One of the leading Gold importing nations has done just that. In March, retailers in India went on strike as the government added new taxes on them. Today, that tax has been removed. “Gold demand will likely improve. It’s a good decision,” said Prithviraj Kothari, president of the Bombay Bullion Association.
China’s economic outlook has improved over the past two months. Inflation and the loss of credit supply have been the main factors in that country’s woes. With the lower oil prices, manufacturing costs are down, and production is up -- even with a slower demand. Another factor is that China’s retail sales continue on pace. “We think April data would show that economic activity is rebounding modestly,” UBS analysts said.
With the stock market slipping and the weak economic growth in the United States, the Federal Reserve will not take off the table the idea of another round of monetary easing. The economy added about 115,000 jobs in April, and that number was below expectations. “In line with expectations was a lame mediocre number. Middle-of-the-road is not good enough in terms of the economy, and that’s why the market is down,” said Peter Boockvar, market strategist with Miller Tabak.
At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold - $1641.00 - Down $5.20.
- Silver - $30.19 - Down $0.26.
Gold dips as European elections hurt euro, stocks
* Europe elections cast doubt on battle against debt crisis
* Euro slides to three-month low, hurting gold
* Some physical demand picks up in Europe, United States
By Jan Harvey
LONDON, May 7 (Reuters) - Gold eased on Monday after election results in France and Greece that reflected strong anti-austerity feeling raised concerns over the euro zone's ability to battle its debt crisis, knocking the euro to a three-month low against the dollar.
Greek voters in particular rejected the austerity-for-aid policies that have shielded the country from bankruptcy and a euro exit, dealing a serious blow to the euro zone's fragile political consensus on debt.
Assets seen as higher risk, such as stocks and commodities, came under pressure along with the euro.
European stocks slumped to four-and-a-half-month lows, Brent crude oil slumped to its lowest since January and safe-haven German Bundfutures reached record highs.
Spot gold was down 0.2 percent at $1,638.11 an ounce at 1343 GMT, while U.S. gold futures for June delivery were down $5.90 an ounce at $1,639.30.
" Gold opens the week lower with investors in risk-off mode after this weekend's election. Stocks are weaker, the euro is losing ground and, since gold is currently considered a riskier asset, it is also losing ground," Alexander Zumpfe, a trader at precious metals house Heraeus, said.
Nonetheless, he added a trickle of buying was arresting further losses in gold. " We saw some physical buyers coming back this morning," he said.
Concern over the outlook for the euro zone was a key factor driving gold prices to record highs last year. But as the dollar, Bunds and U.S. treasuries took over as investors' havens of choice, gold has come under pressure along with the euro.
If the situation in the euro zone worsens significantly, analysts say it could once again become a positive driver of gold, as Europeans scramble to diversify away from the euro.
Greek voters enraged by economic hardship caused by the terms of an international bailout turned on ruling parties in their election, putting the country's future in the euro zone at risk and threatening to revive Europe's debt crisis.
In France, Socialist Francois Hollande won Sunday's presidential polls as expected. Markets are as yet uncertain about his agenda, and anxious to see how hard he will push to dilute a German-led European austerity drive.
" With growing influence of anti-austerity political blocs, tensions among the euro zone will likely be intensified and a wave of renegotiations for bailout programmes may be sparked," Credit Agricole said in a note on Monday.
PHYSICAL DEMAND FAILS TO SHINE
Physical gold demand in Asian markets was lacklustre, with buyers returning to the sidelines after picking up bargains when prices dropped below $1,630 last week, dealers said.
However, gold imports to India, the world's biggest buyer of bullion, could rise on pent-up demand from jewellers after the federal government decided to scrap an excise duty on jewellery it imposed in March, Prithviraj Kothari, president of the Bombay Bullion Association, told Reuters on Monday.
The federal government will withdraw the excise duty on all jewellery effective March 17 - the date it was introduced - Finance Minister Pranab Mukherjee told parliament.
Buying picked up slightly in the United States. Data from the U.S. Mint showed sales of American Eagle gold coins have reached 20,000 ounces this month, the same amount in volume terms as was sold in the whole of April.
From a technical perspective, gold remains in limbo, analysts who study past price moves to determine the future direction of trade said on Monday.
" Gold remains locked in a range," Barclays Capital said in a report, adding it expects buying to pick up as prices ease towards $1,600 an ounce.
" A move above the 1,690 area would confirm our bullish view toward the range highs near 1,800," it added. " Seasonality leads us to expect a mid-year sideways chop before we become more bullish in the second half of the year."
Money managers, including hedge funds and other large speculators, increased their net length in gold in the week ended May 1 by 8,462 contracts to 116,061 contracts, the highest level since the week of April 8, data from the Commodity Futures Trading Commission showed on Friday.
But they reduced their silver length by 191 contracts to 10,565 contracts, the lowest level since early January.
Spot silver was down 0.7 percent at $30.12 an ounce, while spot platinum added 0.3 percent to $1,524.24 an ounce, and spot palladium gained 0.5 percent to $649.21 an ounce. (Reporting by Jan Harvey Editing by Anthony Barker and David Hulmes)
Mid-Day Gold & Silver Market Report – 5/7/2012
By Nicholas WilseyMay 7, 2012GOLD TAX IN INDIA NIXED FED STILL OPENED TO EASING
With the gold price slightly down, the precious metal is in need of a pick me up. One of the leading nations of gold imports has done just that. In March retailers in India went on strike as the government added new taxes upon them. Today that tax has been removed. " Gold demand will likely improve. It's a good decision," said Prithviraj Kothari, president of the Bombay Bullion Association.
China’s economic outlook has improved over the last two months. Inflation and the loss of credit supply have been the main factors in the country’s woes. With the lower oil prices manufacturing cost are down and production is up, even with a slower demand. Another factor is that China’s retail sales continue on pace. " We think April data would show that economic activity is rebounding modestly," analysts at UBS said.
With the stock market slipping and the weak economic growth in the U.S.A., the Federal Reserve will not take the idea of another round of monetary easing off the table. The economy added around 115,000 jobs in April and that number was below expectations. “In line with expectations was a lame mediocre number. Middle of the road is not good enough in terms of the economy and that’s why the market is down,” said Peter Boockvar, market strategist with Miller Tabak.
At 1:00 p.m. (EDT), the APMEX precious metals spot prices were:
- Gold -$1641.00 - Down $5.20
- Silver -$30.19 - Down $0.26
Closing Gold & Silver Market Report – 5/4/2012
By Timothy OakesMay 4, 2012PRECIOUS METALS RISE AS OIL AND JOBS DATA DISAPPOINT
Precious metals are up in afternoon trading. Gold in particular is up after the rather disappointing non-farm payroll report was released. The weaker economy spurs thoughts of possible quantitative easing being back on the table. Fed Chairman Ben Bernanke " had said QE3 is going to be dependent on the incoming data. Next time when he speaks he's going to reemphasize that the Fed is willing to do more," said Axel Merk. He also added, “That's one of key reason why gold is up because we have had a very long period of consolidation.”
The disappointing jobs data actually had a double edged impact today, as unemployment actually dropped, but not very many jobs were actually added. Oil dropped to less than $100 a barrel for the first time since February. “We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption," said Gene McGillian.
The stock markets also experienced their worst week of 2012 on the jobs data news as well. This is the third day of losses within the stock market in a row. “The data point to sluggish job growth, declining labor market participation and for those employed, stagnant purchasing power,” Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., said in an e-mail today. “Consumption is less dynamic at a time when headwinds from Europe and a potential fiscal cliff are still material.”
At 5:15 p.m. (EDT) – the APMEX precious metals spot prices were:
- Gold - $1,644.10 – Up $8.30.
- Silver - $30.34 – Up $0.31.
Rising resource nationalism is bullish for Gold: HSBC
LONDON (Commodity Online): Rising resource nationalism is supportive for gold prices, with the most recent developments occurring in Indonesia, said HSBC, a British multinational bank, in a daily commodities briefing.
On May 6, the country will announce measures for an average 20% export tax on 14 metals in raw form including gold, copper, silver, tin, and lead, according to Energy and Mineral Resources Minister Jero Wacik. The tax is aimed at keeping refining and smelting of raw metals within the country.
" Although not an outright ban on gold exports, this is part of an ongoing trend of growing resource nationalism seen in areas recently such as Argentina, Zimbabwe and Indonesia," the British bank added.
" This is on top of recent news in which Indonesia announced plans to strip foreign majority ownership of mining assets in favor of local ownership. We believe the rising trend in resource nationalism is a bullish case for gold prices," HSBC concluded.
Gold to touch $2100/oz in Q4 2012: Deutsche Bank
NEW YORK (Commodity Online): Gold prices to touch $2,100/ounce in the fourth quarter of this year, said German based Deutsche Bank in a weekly commodities report.
The German bank also added that Gold prices to reach $1,600 an ounce in the second quarter and $1,800 in third.
According to the bank, Central banks are proving to be a powerful source of gold demand, significantly outstripping purchases in previous years.
“We are therefore maintaining are bullish view to the yellow metal,” the German bank added.
Deutsche Bank continued that, the central bank activity has enabled gold to consolidate over the past six weeks even as private-sector flows into exchange-traded products stagnated and net speculative length among futures traders fell to a three-year low.
“The decline in net length in the gold market over the past several quarters has made for a much cleaner market in our view and we expect that despite near-term pressures in the market due to heightened EU risks (and thus the modest outperformance of the USD vs. gold), we believe that further selling could remain subdued,” the bank concluded.
Deutsche Bank has a large presence in Europe, the Americas, Asia-Pacific and the emerging markets.
$10,000 Gold: Nick Barisheff can't hide love for safe haven
TORONTO(Commodity Online): 'The best time to plant a tree is 20 years ago. The second best time is today', says a Chinese proverb, and it is the advice Nick Barisheff, the leading precious metal expert, would give to investors who feel that it is too late to buy gold.
Gold is the most stable form of wealth preservation for over three thousand years, and it still does today, which out performed all other asset classes since 2002, said Nick Barisheff at an event in Toronto earlier this year. Based on official estimates, America’s debt is projected to reach $23 trillion in 2015 and, if the correlation remains the same, the indicated gold price would be $2,600 per ounce. However the gold price will be much higher, taking account of the history.
Nick Barisheff, CEO of Bullion Management Group Inc, the precious metals bullion investment company, has been actively involved in the investment and finance industry for more than 30 years. He has shifted his focus to the world of precious metals and the advantages of investing in gold, silver, platinum bullion, for the last few years. He develops investment strategies, products, services for clients looking to integrate bullion into their portfolios.
Before starting the company he was a leader in designing tax efficient structures for real investors, but later he could identify the precious metal sector as an area that held promises for investors. Through his research he developed the view that gold, platinum and silver, in bullion form, are a vital component of an investment program and should make up ten per cent of a well-diversified portfolio.
In 2002, Bullion Management Group(BMG) launched Canada's only RSP eligible mutual fund that invests directly in gold, silver and platinum bullion, the BMG BullionFund. BMG is one of the world's fast-growing precious metals bullion management companies with CDN$642 million of bullion holdings under management, that provides physical bullion-based products for investors seeking innovative and tax-efficient ways to diversify, grow and preserve their wealth.
On the 10th Anniversary of BMG fund, Nick Barisheff stated, “Although much of the attention has been on central bank purchases since they became net buyers of gold bullion in 2009, the real impetus for what I am convinced will be further rises in bullion values are the pension and insurance funds that at this point hold less than half of one per cent of their assets in gold and mining shares. Continued losses and growing pension deficits will make it mandatory for them to eventually include gold, the one asset class that is negatively correlated to financial assets such as stocks and bonds.”
For those looking for an upside target on the price of gold bullion, this fall Barisheff is launching a new book entitled: “$10,000 Gold: The Inevitable Rise and Investor’s Safe Haven”, scheduled to release in the fall of 2012. The book, published by John Wiley & Sons Canada Ltd, connects the many trends that will be directly and indirectly responsible for both the rising debt and the rising gold price over the next five years.
The book explains why the gold will continue to climb in price, makes the case for owning gold based on the precious metal strong fundamentals, shows investors how to include gold in their portfolios. It shows the readers that they can have a positive financial future regardless of how Wall Street performs, or how much purchasing power printed currencies lose.
Five thousand years of economic history demonstrates that gold is the ultimate safe haven in times of uncertainty, yet it is virtually absent from the portfolios of global pension funds and insurance companies that are responsible for trillions of dollars' worth of the world's financial assets. This makes it even more important for individual retail investors to include gold in a future-proof financial plan.
Gold to steadily decline after $1800/oz peak in Q4, 2012: RBS
NEW YORK (Commodity Online): The Royal Bank of Scotland (RBS) states in their new report that gold prices could hit a peak at $1800/oz by the last quarter of 2012. However, gold is expected to enter a period of steady decline from then, the bank warns
" As the road-map to a more normal macroeconomic environment is in sight and given gold will still be near its historical highs, we believe that investors will rotate into other asset classes”, the bank's report states while adding that gold is expected to average $1725/oz in 2012.
In such an event, platinum and palladium metals will begin to look attractive and could even outperform the yellow metal. " Our forecasts show that while gold and silver still have merit, the more industrially-driven platinum and palladium could be about to take up the running”
RBS projects palladium prices to average $725/oz in 2012 and to move into four-figures in 2013/14, subsequently breaking through its all-time highs of $1125/oz in 2015. Meanwhile, platinum prices are expected to average $1650/oz for the year.
Morning Gold & Silver Market Report – 5/4/2012
By Ryan SchwimmerMay 4, 2012JOB NUMBERS DISAPPOINT GREECE IN TROUBLE AGAIN
Precious Metals prices recovered from early losses this morning after the release of April’s employment report by Automatic Data Processing Inc. The report showed that the economy added 119,000 jobs in April, while economists had anticipated the addition of 160,000 jobs. The unemployment rate fell by one-tenth of a percent, to 8.1 percent, but that was attributed completely to people who gave up searching for jobs. Stock futures fell after the report was released.
If investors thought that the Greek debt crisis had been resolved after the deal reached earlier this year, they should think again. An election Sunday threatens to throw that nation off balance. Analysts at UBS said, “Part of the problem is that the Greek government appears to be running out of money fast. According to the IMF (International Monetary Fund), it has gone back into arrears with suppliers, so the need for the Greek government to implement existing austerity plans and detail future cuts -- in order to receive disbursements under the second aid plan -- is acute.”
In related “stories-we-thought-were-dead” news, Egyptians are rallying for a free presidential vote. Egypt was the spark for the Arab Spring, as protests raged against the longtime rule of President Hosni Mubarak, eventually resulting in his overthrow. Egypt has been under military rule since, and protesters are worried that the generals will manipulate the coming elections.
At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold – $1,637.70 – Up $1.90.
- Silver - $30.09 – Up $0.06.
Gold Traders Await Direction
Daily Bars 
Prepared by Jamie Saettele, CMT
Gold has returned to its range but support comes in from the trendline that extends off of the 4/4 and 4/23 lows at about 1630. Last week’s hold above the 4/4 low suggests that gold has been forming a bullish base since mid-March. Exceeding the April high would put bulls in control towards the trendline above 1700 (that line extends off of the September 2011 and February 2012 highs).
Closing Gold & Silver Market Report – 05/03/2012
by John Foster May 3, 2012GOLD PRICE, S& P BOTH LOSE GROUND
The Gold price was set to close down again today, as falling crude oil prices and concern over American service sector data pushed the metal’s price down nearly 1 percent. A strong employment market reading Friday could add to the downward pressure, as it would likely reduce the likelihood of any stimulus actions by the Federal Reserve. “Things will have to look very weak tomorrow morning to see any upside momentum come back. If the nonfarm payrolls number is stronger, then we’ll see Gold really test $1,600 an ounce,” said Carlos Perez-Santalla at PVM Futures.
The U.S. Service Industries data also pulled the S& P 500 index down for a second day to close at 1,391.57. “It’s a bump in the road,” said Jeffrey Saut at Raymond James & Associates in St. Petersburg, Fla. “The economic data has turned softer. I wouldn’t be surprised to see the jobs report tomorrow disappoint. All that will do is allow the market to work off its overbought condition.”
At 5 p.m. (EDT), the APMEX precious metals spot prices were:
- Gold - $1,637.60 – Down $17.40.
- Silver - $30.12 – Down $0.54.
Gold weighed down by strong Dollar but central bank buying supports
NEW YORK (Commodity Online): The FOMC meeting last week was largely a non-event for precious metals, offering no additional hints on the possibility of another round of QE. However, policymakers maintained their call for ‘exceptionally low levels for the federal funds rate at least through late 2014.’.
-Gold is trading a tight range, constrained by the conflicting forces of surging global liquidity and Eurozone sovereign troubles on one side and a strong dollar and weak physical demand from India on the other. Spain’s credit downgrade last week again raised gold’s safehaven appeal, but the consequent USD strength weighed on gold demand. USD strength is likely to continue to act as a weight on the gold price in the nearterm, while the flood of central bank liquidity stimulus, concerns about pipeline inflation and ultra-low interest rates should remain structurally supportive.
-Central bank gold buying continues apace, led by emerging markets. The trend of central banks diversifying foreign reserves remains strong, with emerging market central banks at the forefront of fresh gold demand in March. Following its 99 tonne buying binge in 2011, Mexico has added another 17 tonnes to its coffers, taking the proportion of gold in its total reserves to around 4% (still low by international standards). Meanwhile, Russia purchased nearly 16 tonnes in March, taking its gold holdings to around 10% of total reserves. Gold is an under-owned asset by most emerging market sovereigns compared to major developed nations like the US (77% of foreign reserves are held in gold) and Germany (74% of reserves held in gold). In China, gold only makes up around 1.7% of total FX reserves. Gold has remained largely rangebound in recent weeks, as strong central bank purchases appear to have offset soft physical demand from India due to the jewellers’ strike.
-The widening growth gap between the US and Eurozone economies will likely be further reinforced by data releases this week with European retail sales and final PMI readings expected to reflect poorly vs US ISM manufacturing and nonfarm payroll releases. Investors will focus on the ECB meeting for signs of further easing, while five Fed speakers will present their views on the economy.
Precious metals appear to be in a holding pattern awaiting a catalyst, and industrially driven platinum group metals could be buoyed if US manufacturing and jobs numbers can continue to improve.
Source: ETF Securities report