Weaker dollar lifts Gold volume light ahead of FOMC

“The last several times Fed Chairman Ben Bernanke has spoke, he has single handedly crushed the precious metals, and I believe his recent record is fresh in the minds of the gold bugs'” Daly added

“Gold traders may be waiting until after the FOMC convenes prior to choosing their trading strategies,” Daly concluded.

Gold, Silver could dip further before any monetary inspired gains

According to TDS, traders may opt to lock in any remaining gains in gold from earlier in the year. The markets are unlikely to get clarity on any further U.S. quantitative easing in the near term and European risks could boost the dollar, which tends to hurt gold. Any selling in silver could mean more downside risk than in gold due to potential for a hit to both investor and industrial demand.

“Before a monetary-policy-inspired move upwards in the second half of 2012, gold could easily move below $1,600/oz and silver below $29/oz,” TDS says.

Meanwhile, recent signs of slowing in the U.S. and Chinese economies could hurt industrial metals. These include platinum group metals, copper and other base metals, they continued.

“The likelihood that these metals will be in a deficit situation is waning, and with it the market’s willingness to pay a scarcity premium for them. This could serve as a near-term downside catalyst for copper, platinum and palladium,” TDS concluded.

Central bank buying helps explain why Gold hold above $1,600 in March: UBS

LONDON (Commodity Online):  The most recent data show that central banks were on a “gold-buying spree” in March, helping explain why prices stopped just above $1,600 an ounce during a pullback, said UBS in a commodity briefing.

Bloomberg reports that data on the International Monetary Fund’s Web site show that Mexico with 16.8 metric tons last month, while Russia added 16.5 tons. Turkey, Kazakhstan, Ukraine, Tajikistan and Belarus also raised gold reserves, Bloomberg reports.

“Today's data certainly helps explain why the $1,600 floor held in March, despite all the indicators that suggested a break of this level was very likely,” UBS added.

“And given that there is consistently a lag in reporting central-bank gold activity, we suspect that reserve managers' activity in March was greater than what today's IMF release confirms,” the bank continued.

The bank describes the data as gold-supportive but perhaps already factored into prices.


“There was a lot of chatter in the market about central banks’ activity in Q1 and so it was very much expected that the IMF data would confirm at least some of this buying. So today we get the confirmation,” UBS concluded. 

'Gold could hit $2100/oz, Silver at $55 by the end of 2012'

  The health of the U.S. economy may not be quite as robust as some government statistics indicate and more stimulus could be on the way, despite what the Fed may be saying. Regardless of which way the economy goes, Chris Marchese, contributor to The Morgan Report, tells us in this exclusive interview, precious metals will go higher as investors seek protection from the effects of monetary policies that don't work. In the process, he expects that greatly undervalued mining shares of silver producers will again shine in the eyes of investors and highlights several of his favorites at current bargain prices.

The Gold Report:  This is an election year and everybody is waiting to see what happens with the economy between now and November. The Federal Reserve just signaled that it may be less willing to provide more stimulus. What's your reading on that?

 

MORE .... 

Gold: 2012 is the year to accumulate Gold

  NEW YORK:  Many forces influence the gold markets today, sometimes producing confusing indicators of what may lie ahead. In this exclusive interview with The Gold Report, John LaForge, commodity strategist at Ned Davis Research Inc., talks about the numerous and sometimes not-so-obvious factors that he considers in his research and how they influence the gold markets and, ultimately, mining shares.

As long as there is no significant improvement in the world monetary situation and real interest rates don't rise dramatically, he believes the gold price trend remains positive and gold stocks should shine brighter.

The Gold Report:  The recent price performance of gold has probably left many investors puzzled about what's going on amid all the conflicting background news. What's your broad-picture view?

 

MORE 

Gold physical demand is lacklustre, support above $1630/oz: Barclays

NEW YORK (Commodity Online):  Gold prices have drifted lower within the recently established range but for now gold lacks a catalyst to drive prices higher or a solid floor firmly limiting the downside. While macro uncertainty ranging from the US fiscal position and further quantitative easing to the EU periphery exposes prices to the upside, physical demand has remained lacklustre.

Money Flows

The longer term " sticky" interest has softened in April but remains relatively robust, outflows have reached just under 6 tonnes month to date but overall metal held in trust is also just 6 tonnes off its peak.

The latest CFTC data for the week ended 17 April shows speculative interest rose by 5.4k lots primarily on the back of short covering activity (7.6k lots) partially offset by long liquidation (2.3k lots). Gross long positions are at their lowest since mid-January and gross shorts at their lowest since end January. Positioning is not currently overcrowded, which bodes well for gold

Indian Demand

Despite India's jewellers reopening stores after strike action,which lasted almost three weeks, physical gold demand has remained soft with volumes also trailing on the Shanghai Gold Exchange. India's Economic Times reported gold sales were 70-80% lower on a daily basis, according to jewellers and bullion dealers as high local prices due to the weak rupee weighed upon demand. Growth has been limited ahead of the Akshaya Tritiya festival. Parliament is scheduled to meet on 7 May to discuss about the changes to be made on the Union- Budget 2012-13 and concerns remain if the import duty at 4% and the new 1% tax on unbranded gold jewellery are retained.

Central Bank Buying

Central bank activity has remained supportive for gold, with gold holding across the Euro-system banks unchanged while data reported by the IMF statistics show a net increase in holdings of just more than 10 tonnes over the first two months of the year. Reuters reported that Syria was trying to sell gold reserves to raise revenue following sanctions agreed by the European Union. The World Gold Council data show Syria held 25.8 tonnes of gold representing 7% of its reserves when it was last reported in Q2 11 but less than 1% of gold held by central banks globally. China Daily subsequently cited the Governor of the Central Bank of Syria denying such reports. We estimate net official sector buying of 450 tonnes last year and continue to forecast net purchases of 350 tonnes for 2012.

Technical

Gold is stabilising above nearby support in the $1630 area  and the failure to break back in to the multi-week down channel is a sign that suggests the market is trying to form a base. Recent Doji candles are also indicative of a basing process and we expect buying interest near $1600 to underpin a move higher in range. Initial targets are at $1700 and then the $1717/$1727 area. Ultimately a move toward the $1800 area is expected before looking for an interim top.

Support: $1629/$1612

Resistance: $1680/$1700


Source: Barclays Capital Report 

Gold/Platinum ratio points to higher Gold prices

 

* Gold extends losses after 2 pct drop so far in April

* Euro zone jitters fail to spark haven demand

* Indian gold demand light ahead of Akshaya Tritiya (Updates throughout, previous SINGAPORE)

By Jan Harvey

April 23 (Reuters) - Gold prices eased towards $1,630 an ounce in Europe on Monday as data showing German manufacturing shrank at its fastest pace in nearly three years in April hurt the euro, though moves were muted ahead of this week's Federal Reserve meeting.

The metal is extending the 2 percent losses it has posted so far this month, in line with a drop in the euro. The single currency has come under heavy pressure from concern over euro zone, and particularly Spanish, debt.

Spot gold was down 0.6 percent at $1,632.04 an ounce at 0925 GMT, while U.S. gold futures for June delivery were down $9.90 an ounce at $1,632.90.

" We are basically caught between two opposing factors," Credit Suisse analyst Tobias Merath said. " On the one hand, we have U.S. bond yields coming off, which adds some support, but concerns over Europe are capping the upside, because the situation in Europe has the potential to lead to deteriorating liquidity conditions.

" As we saw at the end of last year, gold is a hedge against all kinds of crises, but not against a liquidity problem, when people are liquidating assets to raise much-needed cash. They also sell gold in this environment."

Prices will struggle to break out of their current range without fresh drivers, he said.

Gold watchers are turning their attention to the Federal Reserve's two-day policy meeting from Tuesday, at which the prospect of more monetary easing is set to be addressed.

The euro fell to a session low against the dollar after a soft reading of the April German purchasing managers' survey, having drawn little support from news at the weekend that the International Monetary Fund would receive a further $430 billion to safeguard economies from the euro zone debt crisis.

Worries over the euro zone's financial health were apparent in the debt market. German Bund futures hit record highs and French bonds slipped as investors worried that a potential presidential election win by the French Socialists would compromise the euro zone's commitment to fight its debt crisis.

The premium investors demand to hold Dutch 10-year government bonds rather than German Bunds rose to a three-year high on Monday as the country slipped into political crisis after a failure to agree on budget cuts.

Concerns over euro zone debt were a key factor pushing gold to record highs last year, but the dollar has since taken over as investors' safe-haven of choice. Bad news from the bloc now tends to pressure gold, which falls in line with the euro.

 

WORK TO DO

" Gold still has a lot of work to do to convince investors that it has made up its mind on which hat it wants to wear - safe haven or risk," UBS said in a note on Monday.

" For full-fledged safe-haven status to resume, gold will need to consistently exhibit the ability to outperform in a risk-off scenario and lag during a risk rally - shifts in risk appetite as the situation in Europe unfolds would present gold with this opportunity."

 

Physical gold demand remained light in major consumer India even ahead of the Akshaya Tritiya festival on Tuesday, an auspicious day to buy gold.

Buying is being hurt by weakness in the rupee, which makes dollar-priced gold more expensive for local buyers.

In New York last week, money managers raised their net long positions in U.S. gold futures and options to 112,275 contracts, from 109,511 contracts a week earlier, its lowest in more than three years.

While the net length in gold had fallen more than 40 percent from this year's peak hit in early March, the total open interest edged lower from a week earlier to 640,791 contracts, down 13 percent from March and near a two-year low hit earlier in the month.

Among other precious metals, silver was down 1.3 percent at $31.25 an ounce, spot platinum was down 0.6 percent at $1,563.74 an ounce and spot palladium was down 1.1 percent at $663.97 an ounce.

Data from Chinese customs authorities on Monday showed its platinum imports rose by nearly a third last month to their highest since December at 7,446 kgs, while palladium imports have fallen to their lowest since Dec. 2009.

China's silver imports, at 255,455 kg, were down by a third year-on-year, but still at their highest in six months. (Editing by James Jukwey)