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By Peter LaTonaJanuary 19, 2012IS QE3 A LOOMING POSSIBILITY? There is a growing consensus of economists who believe that a $1 trillion QE3 announcement from the Federal Reserve could be coming as soon as this month. These economists believe that the recent uptick in the economy is not sustainable, and today’s dismal report on housing starts only adds to speculation about a possible third round of quantitative easing. The Fed’s Open Market Committee is set to meet next week, and it likely will have the central bank buy up mortgage-backed securities as a tactic to assist the housing market. The goal of these purchases will be to force interest rates even lower and to inspire confidence that the Fed still has a few arrows left in its quiver.
A Reuters poll of about 600 economists indicates that although the world economy will lose steam in 2012, at least it will move in the right direction. The Asian economies will lead the way, and the U.S. is expected to show modest growth. But Europe will continue to lag and drag down global growth. Although not a particularly upbeat forecast, the poll is projecting global growth at 3.3%, which is higher than the 2.5% projected by the World Bank.
China is expected to overtake India as the world’s top Gold consumer in the next couple of years. China and India together already consume almost half of the global Gold demand. Not only is it expected that the Chinese central bank will increase its Gold purchases, consumer demand for Gold in China is growing. One of the reasons is that Chinese banks are making it easier than ever for smaller investors to invest in Gold on a regular basis. Investors can set up accounts where they can buy as little as one gram of Gold every month. The Chinese have a culture of saving, and Gold is seen as a preferred savings vehicle, especially when China currently is experiencing close to 10% inflation.
At 4 p.m., the APMEX precious metals spot prices were:
- Gold - $1,659.00 – Down $2.40.
- Silver - $30.68 – Up $0.06.
Gold dips on weak U.S. data, near 5-week high
SINGAPORE, Jan 20 (Reuters) - Gold slipped on Friday
as weak U.S. data prompted investors to book profits, but a
steady euro and rising equities could limit the decline as the
metal headed for a third week of gains -- the longest winning
streak since November.
FUNDAMENTALS
* Spot gold slipped $2.55 an ounce to $1,654.24 by
0015 GMT. It had hit a high around $1,669 an ounce on
Thursday, its strongest since mid-December, before losing some
of the gains. Bullion struck a record around $1,920
last September.
* U.S. gold for February was steady at $1,655.10 an
ounce.
* The number of Americans filing for new jobless benefits
dropped to an almost four-year low last week, and factory
activity in the mid-Atlantic expanded moderately, suggesting the
economy carried some momentum into the new year.
* Greece and its private bondholders resume debt swap talks
on Friday amid signs they are inching closer to a long-awaited
deal needed to prevent a chaotic default by Athens.
* General Motors Co reclaimed its title as the
world's top selling automaker for the first time since 2007,
after sales of more than 9 million vehicles globally in 2011.
MARKET NEWS
* The euro held near two-week highs against the dollar and
yen in Asia on Friday, having extended its short-covering rally
overnight after successful bond sales in Spain and France
boosted risk sentiment.
* Japan's Nikkei share average hit a two-month high on
Friday, boosted by encouraging results from U.S. banks Morgan
Stanley and Bank of America, while near-term
concerns over Europe eased after successful Spanish debt
auctions.
* Brent crude oil futures climbed back in late trading to
end almost 1 percent higher on Thursday on an easing of worries
over the euro zone debt crisis and signs of steadier global
economic growth.
(GMT) DATA/EVENTS
0700 - Germany producer prices for December
0900 - Italy industrial orders for November
0900 - Italy industrial sales for November
0930 - U.K. retail sales for December
1500 - U.S. existing home sales for December
1530 - U.S. ECRI weekly
Last Updated : 19 January 2012 at 19:05 IST
When will Gold hit a new high?
By Jeff ClarkSome investors are frustrated and a few are worried that
Gold seems stuck in a rut. This stall in price has happened before, of course, but since 2001 it's always eventually powered to a new high. Unless one thinks the gold bull market is over, it's natural to wonder how long might we have to wait before seeing another new high.
Absent some sort of global shock that sparks another rush into gold (easily possible in today's climate), I think the answer may lie in examining the size and length of past corrections and how long it took gold to reach new highs afterward.
It makes sense that big corrections would take longer to reach new highs than small ones, but I wanted to confirm that assumption with the data. I also wanted to determine if there were any patterns in past recoveries that would give us some clues that we can apply to today.
Gold set a record on September 5 at $1,895 an ounce (London PM Fix) and to date has fallen as low as $1,531 (December 29), a decline of 19.2%. In order to determine how long it might take to breach $1,895 again, I measured how long it took new highs to be mounted after big corrections in the past.
The following chart details three large corrections since 2001, and calculates how many weeks it took the gold price to a) breach the old high, and b) stay above that level.
As you can see, it took a significant amount of time for gold to forge new highs after big selloffs. And yes, the bigger the correction, the longer it took.
In 2006, after a total fall of 22.6%, it took a year and four months for gold to surpass its old high. After the 2008 meltdown, it was a year and six months later before gold hit a new record.
Our recent correction more closely resembles the one in 2003. After a 16.2% drop, gold matched the old high seven months later. It took another two months to stay above it.
So when do we reach a new high in the gold price?
Let's apply the same ratio from the 2003 correction and recovery: If it took 29 weeks and four days to reach a new high after a 16.2% correction, a 19.2% pullback would take 35 weeks and 0 days. That works out to Monday, May 7, 2012.
An exact date is pure conjecture, of course. On one hand, gold could drop below the $1,531 low if the need for cash and liquidity forces large investors to resume selling. On the other hand, Europe and/or the US could resume money printing on a large scale and send
Gold soaring overnight. The point of the data is that it signals we shouldn't be too surprised if we don't hit $1,900 for another four months yet. And if it takes another two months or so to stay above it.
Think that's too long? There are some important reasons to not let it discourage you…
Once gold breaches its old high, you'll probably never be able to buy it at current prices again.
That's a rather obvious statement, but let it sink in. Buying now at $1,600 and then watching the price fall to, say, $1,500, wouldn't be fun – but it'll probably hit $2,000 or higher before the year's over, never to visit the $1,600s again this cycle. If that turns out to be correct, the next four months will be the very last time you can buy at these levels. You'll have to pay a higher price from then on.
Look at it this way:
If the " rebound ratio" is similar to the one in 2003, you have four months and counting to buy whatever gold you want before it's no longer on sale. It's entirely possible that by this time next year you will never again be able to buy gold for less than $2,000 an ounce – unless maybe it's in " new dollars" or some other currency that circulates with fewer zeros on the notes.
The data can also help you ignore the noise about gold's bull market being over and other nonsense spewed from mainstream media types. If gold doesn't hit $1,900 until May, you'll know this is simply normal price behavior and that they're overlooking basic patterns in the data. And when September rolls around – seasonally the strongest month of the year for gold – and the price is climbing relentlessly and they're caught off guard by it, you'll already be positioned.
Regardless of the date, we're confident that a new high in the gold price will come at some point, because many major currencies are unsound and overburdened with debt – and they're all fiat and subject to government tinkering and mismanagement. Indeed, the ultimate high could be frighteningly higher than current levels. As such, we suggest taking advantage of prices that won't be available indefinitely.
After all, you don't want to be left without enough of nature's cure for man's monetary ills.
Soure:
caseyresearch
Last Updated : 19 January 2012 at 19:30 IST
Five reasons why gold to hit $2000 in 2012
Gold has just completed the eleventh year of a bull market with the price of
Gold increasing around 400 per cent since 2001. There are many analysts and investment managers who believe that the positive outlook for the price of gold bullion will continue with further price rises expected during the course of 2012. Here are our top five reasons why we believe the price of gold could reach $2,000 per ounce or higher this coming year.
--Gold is often bought by investors who are buying the metal as a safe haven amid turmoil in the financial markets. And we certainly have turmoil in the financial markets at the moment. Many countries are struggling with massive debts and the Euro zone is arguably on the verge of collapse.
--It is going to take years for countries to sort out the financial problems they currently face. This in turn could
Lead to a rise in the price of gold as the financial uncertainty continues.
--We are seeing increased demand from central banks over the last couple of years. This is because central banks in several emerging economies are looking for alternatives to the US dollar. The banks are looking to invest in gold because it has a longer track record as a reliable store of value. Central banks bought 344 tons of
Gold in the first 11 months of 2011 a lot of it going to Turkey and Russia.
--There is a limited supply of gold and the amount of physical gold available is shrinking. This is partly due to investors from China and Asia who are unlikely to sell. It is also partly due to the renewed interest in buying gold coming from the central banks who will probably hold their gold for decades. This should have the effect of leading to higher gold prices.
--Inflation is currently leading to negative real interest rates in a lot of countries. This means that money in the bank is worth less and leads investors to buy gold as a way of preserving their wealth. If central banks print more money to try to fight inflation, the demand for gold will increase.
Gold prices can be quite volatile. Although there is a rising longterm trend we also see big upswings which are often followed by big downturns. Before investing in gold bullion you should do plenty of research to make sure it is the right investment for you.
Source:
EzineArticles
Last Updated : 19 January 2012 at 22:05 IST
The 3 risks for Gold prices in 2012
By Adrian AshGold Price bulls have been so short of worries to keep them awake at night, in fact, many will no doubt be grateful for the 20% plunge of late 2011. Y'know, just to keep their hand in.
" We think the peak would be towards the end of this year or maybe some time in the first half of next year," says Neil Meader, research director for GFMS, the precious metals consultancy acquired by news-wire, data and dealing-terminal providers Thomson-Reuters in 2011.
The trigger for gold's final top and decline? " Anything that really signals to the market that the structural imbalances and the various problems affecting the strength of various currencies are moving behind us, that we are moving beyond this current financial crisis situation," says , speaking to TheStreet after launching GFMS's latest
Gold Survey Update in New York on Tuesday.
Now, whatever you make of that risk, gold investors should perhaps be pleased to see the world's leading data and analysis provider flagging such an event. Because like pullbacks in a bull market, it can only be healthy to consider the inevitable end every so often.
In particular, says Neil Meader,
" One overt trigger that is worth looking for is the start of a serious ratcheting up of interest rates. Because, for Gold Investment to be popular, you do need really low interest rates."
Of course, the risk of higher interest rates in 2012 looks about as high as interest rates themselves right now – i.e., zero. Even where the cost of borrowing or the return on cash is better than nothing, it isn't after you account for inflation. And as BullionVault never tires of reminding people, it's that rate – the real rate of interest – which really matters to the ebb and flow of gold demand in the end.
Let's not rehearse the mechanics here, beyond noting the gut instinct savers worldwide retain for favoring rare, indestructible Gold Bullion over inflation and bank-default risk when cash-in-the-bank lags the cost of living. Hence the rise in global Gold Prices, rather than just in Dollars, over the last decade. It shows clearly in our Global Gold Index, mapped above.
BullionVault's GGI prices gold against a weighted basket of the world's top 10 currencies, as measured by the size of their issuing economy. So yes, the Dollar is top, then the Euro, Chinese Yuan, Japanese Yen, British Pound and so on. The GGI has risen 5-fold over the last decade, just like the S& P index of the 500 largest US corporations did in the 1990s. Unlike the S& P, however, gold hadn't already risen 5-fold in the 15 years previous.
History says the gold bull market cannot run forever.GFMS have long noted that the " Gold Price will eventually change direction." But pending the big downturn in gold prices, and whether or not it show up in late 2012 – or early 2013, or maybe a bit after, if not whenever this financial crisis is finished and things get back to what we used to call normal –
here's 3 things likely to make Gold owners reach for the Valium at some point or other this year:
EuropeOh sure gold offers unique insurance against default or devaluation, because it can't be created or destroyed, and it is no one else's liability to renege on (so long as you own it outright). Short term, however, a credit squeeze is likely to force up the Dollar and drain liquidity from derivative markets, including Gold Futures. Repeating the impact of Lehman's 2008 collapse, Europe's credit crunch in the second-half of 2011 forced the collapse of broker MF Global, further helping the speculative position in US gold futures fall in half. That's certain to dent prices short term, even if Gold Investment demand for physical bar and coin is surging for fear of the political and monetary reaction.
ChinaThe middle kingdom is supposed to be an unalloyed good for gold prices. Disappointing both GFMS and ourselves by failing to take out India's top spot in 2009, it's likely to stand closer still as world number 2 in 2012. But unlike investors here in the developed West, Chinese gold demand clearly shows a significant and positive link with economic growth – and no one yet knows how a credit squeeze or " hard landing" might affect the globe's fastest-growing demand for physical bullion. Our guess is that tight credit and stalling income growth wouldn't be good for gold. Beijing's response might be, however, if 2008-2009 is a guide.
VolatilityGuaranteed in 2011, volatility in Gold Prices still lagged US equities, but that's small comfort if you imagined owning gold really would let you sleep through the night undisturbed. Owning physical property, in law, means you escape credit, not price risk. That's quite the advantage over packaged financial-services products today, but for retained wealth trying to hide from the storm in gold,rising volatility is known to dent India's household buying, the world's largest single source of demand. Imports fell 8% by weight in 2011, thanks to a near-collapse in the final 3 months. There's also a plain risk that – after rising each year since 2001 – the recent whip-sawing of the gold price might dissuade Western investors, too. After all, if gold is supposed to be a " safe haven" amid any event, it failed in the second-half of 2011, even though it's tripled during this 5-year crisis so far.
There, all that noise should help keep you awake tonight. As for tomorrow, there are plenty of other nightmares threatening your wealth elsewhere. Surging real interest rates paid to your cash savings shouldn't be one of them.
Source:
bullionvault
by Timothy Oakes January 19, 2012
IMF PLAN AIDS EUROPE, FACES CHALLENGES U.S. JOBLESS CLAIMS FALL
Most precious metals prices were on the rise in early morning trading. The euro has reached a two-week high against the U.S. dollar. The announcement of access to bailout funds from the International Monetary Fund is facing hurdles but is viewed as a boost to European stocks. Senior analyst Radeep Unni of Richcomm Global Services said, “Rising risk appetite, a weak U.S. dollar and the breach of key resistances is
giving Gold the momentum to head towards the $1,700-an-ounce level in the near term.”
The IMF has reached out in hopes of doubling its cash reserves by almost $600 billion as a means to help countries deal with the eurozone debt crisis. The plan faces challenges from a number of countries, including the United States. The plan has some support from Japan, but faces conditional acceptance from China. The hope is to come to some resolution for the upcoming G-20 summit in Mexico.
The only concern is how much is being asked of these countries without more firm European financial support. A U.S. Treasury spokesman said, “We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts. … The IMF cannot substitute for a robust euro area firewall.”
Always key indicators of domestic economic growth have been unemployment and jobs reports. In data released this morning, the number of
jobless claims decreased more than 50,000. That has led to stocks opening on a much higher note in conjunction with the feeling that the Fed has done enough to insulate the American economy from the eurozone debt crisis.
The S& P 500 has gained 4%, the most since 1987. James Dunigan, chief investment officer for PNC Wealth Management, echoed that sentiment, saying, “Europe is important, but it’s not the end of the world if they see a recession. … We’re starting to see that modest economic growth expectation for this year.”
At 8:11 a.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,660.30 – Down $1.10.
- Silver - $30.72 – Up $0.10.
Gold climbs as rising risk appetite lifts euro
* IMF lending expansion plan under discussion
*
Greece in talks on deal with creditors
* Stocks, euro climb as appetite for risk sharpens (Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Jan 19 (Reuters) - Gold climbed for a fourth session on Thursday as the euro hit a two-week high versus the dollar and European stock markets rose on hopes the IMF may boost lending resources, with markets also awaiting the outcome of crucial talks between Greece and its creditors.
Spot gold was up 0.2 percent at $1,661.99 an ounce at 1021 GMT, having earlier peaked at $1,669.75, its highest since Dec. 13. It has had a positive start to the year, up 6.4 percent since end December.
Gains in the euro have helped it this week. The single currency climbed to a two-week high against the dollar and the yen on Thursday, supported by better appetite for assets seen as higher risk.
" Rising risk appetite, a weak U.S. dollar and the breach of key resistances is giving gold the momentum to head towards the $1,700 an ounce level in the near term," said Pradeep Unni, senior analyst at Richcomm Global Services. Further resistance could be expected at $1,686, he added.
European shares hit their highest in nearly 5-1/2 months as traders awaited the outcome of talks between Greece and its private creditors. They meet for a second day of bargaining on a crucial bond swap deal on Thursday, with time running out for reaching a compromise needed to avoid a default.
Risk appetite was helped by news that the IMF is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout of the
euro zone debt crisis.
Safe-haven German government bonds slipped meanwhile before debt auctions from Spain and
France.
" Gold could receive additional buoyancy if the market responds positively to today's auctions of Spanish government bonds," said Commerzbank in a note. " On the other hand, negotiations over the Greek haircut are clearly on a knife-edge."
LUNAR NEW YEAR LOOMS
Swiss bank UBS said in a note that gold's ability to rise even without the prospect of continuing strong physical demand, boded well for the precious metal.
" Some participants may be reluctant to be long gold here, with the Lunar New Year next week impacting physical demand from many centres, particularly
China, raising the risk that it won't be able to provide much of a price floor," it said.
" Hence if gold can end next week higher, it would be another positive sign."
On the supply side of the market, Russian precious metals miner Polymetal said on Thursday it expects 2012 gold output to range from 590,000-640,000 ounces, up from 443,000 ounces last year, as it expands mining operations.
Silver prices tracked gold higher, up 0.6 percent at $30.66 an ounce. Its ratio to gold - the number of silver ounces needed to buy an ounce of gold - dipped to 54.1, down from a peak of 57.4 hit in late December, its highest in more than a year.
" The gold:silver ratio has dropped back to...the base of our one-month range," said ScotiaMocatta in a note. " A close below 54.00 will bring in sellers of the ratio looking for a return to the 50.00 area."
Spot platinum was up 0.8 percent at $1,530.50 an ounce, while spot palladium was up 0.6 percent at $667.97 an ounce.
Shares of Anglo American Platinum tumbled 4 percent on Thursday after the world's top platinum producer said 2011
earnings likely fell by about a third, hit by costs linked to a black empowerment deal.
The company also said earnings were adversely affected by the high number of safety stoppages resulting in lower production, as well as higher costs, particularly for labour and electricity. (Reporting by Jan Harvey Editing by Alison Birrane)
Gold up for 4th day on IMF funding hopes
* G20 to discuss IMF lending expansion plan on Thursday,
Friday
* Spot gold aborts target at $1,625.20 -technicals
* Coming up: US weekly jobless claims 1330 GMT
By Rujun Shen
SINGAPORE, Jan 19 (Reuters) - Spot gold edged higher
on Thursday, on course for a fourth session of gains, supported
by hopes of increased funding from the International Monetary
Fund to help tackle the euro zone debt crisis.
Deputy officials from the Group of 20 nations are set to
discuss the plan at a meeting in Mexico on Thursday and Friday.
A boost in liquidity would benefit bullion as well as riskier
assets.
" The IMF funding talk is giving some support to metals,"
said Peter Fung, head of dealing at Wing Fung Precious Metals in
Hong Kong. " The market is also supported by fresh buying of some
funds and physical demand."
But physical buying from China was slowing, as the country
is headed into a week-long Lunar New Year holiday next week,
dealers said.
Cash gold prices had advanced 1.5 percent so far this week,
riding on renewed optimism over global growth after upbeat data
from China, the United States and Germany that boosted the euro,
commodities and equities.
Spot gold inched up 0.3 percent to $1,663.99 an ounce
by 0615 GMT, approaching a one-month high of $1,667.41 hit
earlier in the week.
U.S. gold also gained 0.3 percent to $1,664.50.
Technical analysis suggested that spot gold's bearish target
at $1,625.20 has been temporarily aborted, said Reuters market
analyst Wang Tao.
The uncertainties around the euro zone debt crisis continue
weighing on sentiment, as investors closely watch the progress
in talks between Greece and its creditors on a debt swap deal.
The failure of the talks would push Greece towards an unruly
default, which could doom the euro and hobble the global
economy.
Analysts expected gold prices to rise further as the
fundamentals for strong gold have not changed.
" Gold's key pillars of support remain intact, ranging from
central bank buying to negative interest rates and rising
longer-term inflationary pressures supporting investment
demand," Barclays Capital said in a research note.
Platinum group metals retained strength on supply concerns
in South Africa and improved sentiment on the global economy.
Spot platinum rose to 6-1/2-week high of $1,534.50, and
spot palladium hit a one-month high of $669.78.
Last Updated : 18 January 2012 at 23:20 IST
Barclays: Gold’s key pillars of support remain intact
LONDON (Commodity Online): Barclays Capital said in a briefing that the supportive influences remain in place for gold. Gold prices have kicked off the year slowly, reclaiming lost ground after testing their lowest levels since July at the end of last year.
“As we have highlighted previously, gold has had to overcome a number of barriers including dollar strength, which was compounded at the end of last year by having to tackle technical selling and the need for liquidity amid reduced risk appetite,” Barclays added.
“But in our view, gold’s key pillars of support remain intact ranging from central-bank buying to negative real interest rates and rising longer-term inflationary pressures supporting investment demand,” Barclays concluded.
January 18, 2012 • 16:01:51 PSTIMF in need for one trillion dollars/The Private Greek Bond fiasco/Goldman Sachs earnings abysmal/ Read More
Gold steady IMF funding hopes support
SINGAPORE, Jan 19 (Reuters) - Spot gold held steady on
Thursday after three successive days of rise, supported by hopes
of increased funding from the International Monetary Fund to
help tackle the euro zone debt crisis.
FUNDAMENTALS
* Spot gold edged down 0.1 percent to $1,657.30 an
ounce by 0026 GMT.
* U.S. gold also inched down 0.1 percent to
$1,657.80.
* The IMF is seeking to more than double its war chest by
raising $600 billion in new resources to help countries deal
with the fallout of the euro zone debt crisis, which will be
discussed by Group of 20 officials on Thursday and Friday.
* The talks between Greece and its creditors will continue
to grip investors' attention. The debt-laden nation needs a deal
within days to avoid the prospect off default.
* U.S. factory output in December grew at the fastest pace
in a year and homebuilder sentiment improved this month, further
evidence the economy entered the new year on firmer footing.
MARKET NEWS
* U.S. stocks jumped to their highest since July on
Wednesday as the International Monetary Fund sought to help
countries hit by the European debt crisis, while
forecast-beating earnings from Goldman Sachs dispelled some
worries over bank profits.
* The euro and commodity currencies got off to a positive
start in Asia on Thursday, following solid gains overnight after
news the IMF wanted to bolster its war chest to help tackle the
euro zone debt crisis shored up risk sentiment.
DATA/EVENTS
Freeport McMoRan earnings Q4
0030 Australia Employment Dec
1200 UAE ECB President Mario Draghi speaks
1330 US Housing starts/building permits Dec
1330 US CPI/Core CPI Dec
1330 US Jobless claims Weekly
1400 IRELAND Troika news conference Quarterly
1500 US Phila. Fed business activity index Jan
2330 Japan Reuters Tankan DI Jan
By Peter LaTonaJanuary 18, 2012GOLD, SILVER PRICES MAINTAIN GAINS THROUGH AFTERNOON Gold and Silver prices have maintained modest gains through the afternoon trading hours. On a day when no news significantly affected the precious metals market, it is no surprise to see little in price movement. One piece of news that eventually could rock the markets is the potential for another congressional battle on whether to raise the U.S. debt limit. The U.S. House of Representatives voted today to oppose another increase in the nation’s debt limit. You might remember that this political battle went on most of June and July before it finally was approved. Of course, the bipartisan bickering and perceived lack of political will and direction were cited as major factors in the decision of Standard & Poor’s to downgrade the U.S. credit rating. Let’s hope this next round goes more smoothly.
CNBC executive producer John Melloy said Gold is back and still in a super bull market. Melloy conceded that Gold lopped off a quick 21% in the last quarter of 2011, but corrections are par for the course. In 2011, Gold still finished up 10%, and it is up 5% this year. In January 2011, the price of Gold fell 8%. The general consensus from those bullish on Gold is that as long as sovereign nations continue their print-and-inflate policies, Gold prices will go up.
At 4 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,660.60 – Up $3.50.
- Silver - $30.57 – Up $0.35.
Last Updated : 18 January 2012 at 22:00 IST
World Bank cuts global economic forecasts
WASHINGTON (Commodity Online): The World Bank slashed its global economic growth forecasts Tuesday and warned that rich nations' debt problems may yet reap a crisis that would eclipse the tumult of 2008.Citing weakness across the globe, the Washington-based lender projected global growth of 2.5 percent in 2012 and 3.1 percent in 2013 -- sharply lower than previous estimates of 3.6 percent for both years.
" The world economy has entered a very difficult phase characterized by significant downside risks and fragility," the twice-yearly Global Economic Prospects report said.
While financial turmoil appeared contained at the moment, " the risk of a much broader freezing up of capital markets and a global crisis similar in magnitude to the Lehman crisis remains."
High-income countries cannot count on the willingness of markets to finance their deficits and maturing debt, it warned.
If shunned by the markets, a much wider financial crisis could sweep private banks and financial institutions on both sides of the Atlantic.
" The world could be thrown in a recession as large or even larger than that of 2008/09."
Only partly recovered from that global slump, both high-income and developing countries require bolstering to withstand the impending slowdown, the World Bank said.
" In the event of a major crisis" countries could be forced to cut spending, which would further deepen the negative cycle.
Financial turmoil in both developing and high-income countries has slammed the brakes on global growth despite relatively strong activity in the United States and Japan, it said.
The global economy grew at an estimated 2.7 percent rate in 2011, according to World Bank figures.
In addition, growth in several major developing countries, particularly Brazil and India, has slowed in part because of domestic policy tightening.
" Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," said Justin Lin, the World Bank's chief economist.
Developing country growth was revised down to 5.4 percent from 6.2 percent in the June projections.
High-income countries were expected to grow a tepid 1.4 percent this year, weighed down by a 0.3 percent contraction in the 17-nation eurozone.
World trade also was slowing sharply, with growth seen at only 4.7 percent for this year compared with an estimated 6.6 percent in 2011.
But the World Bank warned that even achieving these much weaker outcomes was " very uncertain" considering the risks.
" The downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce on another, resulting in an even weaker outcome."
It also noted that oil supplies could be disrupted amid potential political tensions in the Middle East and North Africa.
High deficits and debts in the US and Japan, as well as a slow-trend growth in gross domestic product (GDP), or economic output, in other high-income countries, " could trigger sudden adverse shocks."
The World Bank projected the United States, the world's largest economy, would grow 2.2 percent this year as it slowly recovers from the Great Recession.
Japan would emerge from last year's recession with GDP growth of 1.9 percent in 2012.
China again would be the planet's growth engine, although at a slower pace of 8.4 percent this year, compared with an estimated 9.1 percent jump in 2011.
Capital flows to developing countries have shrunk by almost half compared with 2010, it said, calling on them to " prepare for the worst."
The 30 developing countries with financing needs that exceed 10 percent of GDP should seek to refinance those needs " now," the Bank said.
It also recommended prioritizing social safety net and infrastructure programs that are key to longer-term growth.
Noting a recent decline in commodity prices had eased inflation in most developing countries, the bank said that nonetheless " food security for the poorest, including in the Horn of Africa, remains a central concern."
Source: Gmanetwork
Last Updated : 18 January 2012 at 19:35 IST
Gold and Stocks: Q1, 2012 forecast
By Chris Vermuelen
Over the past five months Gold has fallen sharply and is no longer headline news which it once dominated back in 2011 when it was making new highs every day. The shiny metal has been under pressure because traders and investors started to pull some money off the table to lock in gains.
Gold prices had surged so fast most advanced traders knew that final high volume surge was not sustainable. But the main reason gold topped out in my opinion was because the US Dollar index had put in a bottom and started to build a base. As we all know a rising dollar typically means lower stocks and commodity prices.
I have posted some charts below covering gold in detail using multiple time frames. The weekly which is long term, daily which is the intermediate trend and the 4 hour chart which shows gold momentum and intraday action. At the very bottom I talk about the US Dollar and what is happening with that.
Gold Weekly Long Term Trend Analysis
The weekly chart is not the most exciting time frame to follow as you will grow old watching it. That being said it is crucial for understanding the long term trend, price and volume analysis.
Below you can see that gold's recent pullback has been a 3 wave correction, which is a normal pullback for any investment. But taking into account the rally from 2008 - 2011 I feel this pullback will have one more low put in before bottoming out. This would make for a 5 wave correction much like what happened in 2008.
Daily Chart of Gold Showing the Intermediate Trend
The daily chart allows us to see gold intra-week price action and use the 150 moving average which is my preferred daily moving average. As you can see we are getting a similar pullback as 2008 with gold now trading under the 150 MA.
I would like to see gold make another lower low in the next 2-3 months. If that happens I feel it complete the correction and trigger a strong multi month or multiyear rally in gold.
4 Hour Intraday Chart of Gold
The 4 hour chart of Gold allows us to see all the intraday price action which would normally not be seen with a daily chart. It also gives us enough data to build our analysis upon.
My preferred setup for gold which I feel if happens will trigger major buying in the yellow metal. If/when we get a rally in gold would also likely mean some more economic uncertainty has entered the market either from within the USA, Europe or China…
Weekly Dollar Index Long Term Analysis
The dollar has the potential to rally to the 87 - 88 level before putting in a major top. For this to happen we will need to see the Euro crumble (both currency and countries divide) in my opinion.
If you look at the weekly chart of gold and this chart of the dollar index you will notice that gold topped when the dollar bottomed. Over the past couple year's gold and the dollar have had an inverse relationship to each other.
With all kinds of crap about to hit the fan overseas I think it's very possible gold will rally with the dollar. Reason being there is way more people overseas who want to unload their euro's and with all the negative talk and doubt with the US Dollar individuals will naturally want to buy more gold.
Weekend Trend Trading Conclusion
In short, I expect a bumpy ride for both stocks and commodities in the first quarter of 2012. With any luck gold will pull back into my price zone shaking the majority of short term traders out just before it bottoms. And we will be positioning ourselves for a strong rally buying into their panic selling.
To just touch base on the general stock market quickly. I have a very bearish outlook for stocks. If the dollar continues to rise it is very likely the stock market will fall into a bear market. So I am VERY cautious with stock at this time.
Source: goldandoilguy
Gold eases as euro rally loses traction
* Euro retreats from session high versus dollar
* Stocks still soft ahead of talks on Greek debt
* Indian demand softens as traders digest duty hike
By Jan Harvey
LONDON, Jan 18 (Reuters) - Gold turned lower on Wednesday in line with a dip in the euro from the day's highs and a decline in stock markets, as initial enthusiasm over the International Monetary Fund's plan to boost lending to struggling euro zone nations evaporated.
Spot gold was down 0.3 percent at $1,645.84 an ounce at 1447 GMT, off a high of $1,659.21 an ounce, while U.S. gold futures for February delivery eased $8.00 an ounce to $1,647.60.
The euro pared gains versus the dollar as the rally sparked by the IMF plan and a Fitch's comment that the ratings agency did not expect Italy to default ran out of steam.
Traders are awaiting the outcome of talks between Greece and its creditors, as they go head to head on Wednesday amid rising optimism the country can hammer out a bond swap deal to stave off a painful default.
" If you can move towards a long-term solution in Europe, then that is negative for gold," said Natixis analyst Nic Brown.
" You have to look at how much money has been invested by Europeans in gold, and if you had some kind of resolution that gave you more confidence in the currency, to what extent those net inflows would turn into net outflows."
Gold has risen 5.9 percent so far this year, but has struggled to maintain upward momentum after confidence in the metal was battered by a 10 percent price fall last month.
The metal has managed to climb in January even at times when the euro has softened, but its strength relative to the dollar has tended to have a positive effect on the metal.
Stock markets weakened and safe-haven German bunds rose as traders awaited the outcome of talks on Greece. Athens is making a last-ditch effort to seal a deal with bondholders needed to reduce its debt and secure vital aid funding.
China's gold purchases slowed down ahead of the Lunar New Year holiday, while India's bullion traders held off placing fresh orders after an increase in gold import duty was announced earlier this week.
India's government raised gold import duty to 2 percent of value from the previous flat rate of 300 rupees per 10 grams.
IMPACT MUTED
UBS said in a note that while the impact of the increase would probably be muted in the short term, " the reaction to this new floating tax rate is likely to be delayed" .
" The full impact will be observed once internal stocks (with the old import tax) become depleted and new consignments are shipped in," it said.
On the supply side of the market, the world's number four gold miner, Gold Fields, said its fourth-quarter production was down nearly 2 percent, and full-year output was down at 3.49 million ounces.
Meanwhile, African Barrick Gold, a unit of the world's largest producer Barrick Gold, reported an 11 percent fall in fourth-quarter output after power outages at its Buzwagi mine, resulting in a 2 percent decline in full-year output.
Among other precious metals, silver was up 0.8 percent at $30.28 an ounce.
The world's largest primary silver producer, Fresnillo , beat its annual output target and said it expected stable silver production in 2012.
Silver prices fell sharply last year from a record near $50 an ounce it hit in April and underperformed gold in the full year, falling 10 percent against gold's 10 percent rise. Its ratio to gold is currently at 54.9, up from 31.7 in April.
Spot platinum was down 0.9 percent at $1,506.49 an ounce, while spot palladium was down 0.1 percent at $647.72 an ounce.
By Ryan SchwimmerJanuary 18, 2012IMF TO INCREASE EURO LENDING GEOPOLITICAL TENSIONS ABOUND U.S. stock futures are up mildly, while precious metals prices are dipping slightly after the release of economic data this morning. Wholesale prices, a key gauge of inflation, fell by 0.1% in the U.S. However, this decline in prices is only due to large dips in food and energy costs, which are stripped out when the core wholesale prices are calculated. This core price rose 0.3%, a spike that is higher than normal.
Rumors that the International Monetary Fund could be increasing its lending capacity to Europe by $500 to $600 billion are supporting markets across the board today. Andrey Kryuchenkov of VTB Capital said this is good news for Gold. “The safe haven status quo continues to hold its ground as troubles in the eurozone are far from being resolved,” he said. “Further easing in the eurozone and accommodative monetary policies would be bullion-supportive.” This news could also drive up the euro’s value, and Peter Fertig of Quantitative Commodity Research Ltd. said, “A weaker U.S. dollar should be supportive for Gold.”
A quick glance at world news this morning is a reminder that geopolitical tensions are still very active, which could also support the safe-haven appeal of Gold. Pakistan has denied a visit to that country by a U.S. ambassador. Pakistan still has problems with India, and India still has problems with China. Therevolution in Syria presses on with more bloodshed. Iran says negotiations are under way regarding its nuclear program, while Israel says it is far from a decision about attacking Iran because of the nuclear activity.
At 8 a.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,647.00 – Down $9.80.
- Silver - $30.17 – Down $0.05.
By Brandi BrundidgeJanuary 17, 2012GOLD RALLIES U.S. RECOVERY OUTLOOK POSITIVE Precious metals prices ended today on a positive note. Gold’s rally today was based on a weakening dollar and Europe’s financial and credit issues. Jim Steel with HSBC said, “The market reacted to an increase in risk tolerance. Gold was also riding the coattails of sharp increases for U.S. stocks and oil.” George Gero of RBC Capital Markets shared his viewpoint on Europe, saying, “The downgrades of the eurozone countries means fiscal stimulus is not far behind.”
Most of the focus has been on credit rating agency Standard & Poor’s (S& P) and its decision to cut the credit ratings of nine eurozone countries. The downgrades came as no surprise, as speculation had been in the news for a while. Steen Jakobsen at Saxo Bank said, “Effectively, S& P did what it was supposed to do: It ignored the ‘PowerPoint presentation’ from the EU and looked only at the accounts.The accounts speak clearly for themselves: no progress, no real plans.”
The outlook is optimistic for growth in the U.S. economy, which is pushing the price of Silver up. Silver is used heavily in electronic devices. Investors became aware of the success in debt auctions by Spain and Greece. This relieved the uncertainty that the eurozone fiscal crisis may affect recovery in the U.S.
At 4 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,653.30 – Up $21.50.
- Silver - $30.12 – Up $0.53.
- Platinum - $1,525.40 – Up $37.60.
SINGAPORE, Jan 18 (Reuters) - Gold hovered above
$1,650 an ounce on Wednesday, as investors shifted their focus
back to the euro zone crisis after prices gained on data
pointing to a better outlook for the global economy.
FUNDAMENTALS
* Spot gold was little changed at $1,651.95 an ounce
by 0027 GMT, after rising for two consecutive sessions.
* U.S. gold edged down 0.2 percent to $1,652.50.
* Market sentiment improved on Monday on an improved outlook
in China, Germany and the United States, buoying commodities and
equities.
* The euro zone debt crisis still looms large. International
creditors plan to resume talks with Greece on a debt swap plan
on Wednesday, after discussions stalled last week.
* India hiked its gold import duty by 90 percent and doubled
the tax on silver on Tuesday as the world's biggest consumer of
bullion seeks to increase revenues, sending futures prices
higher and hitting shares of jewellers.
* Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, edged up 0.12 percent from the
previous session to 1,255.67 tonnes by Jan 17.
* Gold may reach a record high above $2,000 an ounce in late
2012 or early 2013, but the precious metal is nearing the end of
a decade-long run that has lifted prices by more than 600
percent, metals consultancy GFMS said on Tuesday.
MARKET NEWS
* U.S. stocks advanced on Tuesday, pushing the S& P 500 to
its highest since early August, but sharply pared gains late in
the session as Citigroup's steep drop in profit gave investors a
reason to unload bank shares.
* The euro clung on to most of its overnight gains in Asia
on Wednesday but came off its peak after disappointing earnings
from Citigroup took the shine off a batch of upbeat data from
China, Germany and the United States.
DATA/EVENTS
Goldman Sachs earnings Q4
BHP Billiton production report Q4
0430 Japan Industrial output rev Nov
1245 U.S. ICSC chain stores yy Weekly
1330 U.S. PPI inflation yy, NSA Dec
1330 U.S. Producer prices mm Dec
1330 U.S. Producer prices, core mm Dec
1330 U.S. Producer prices, core yy Dec
1415 U.S. Industrial output mm Dec
1500 U.S. NAHB housing market indx Jan
Gold hits 5-week high as euro, commodities rise
* Gold bounces to 5-wk high on dollar retreat, commod gains
* Chinese data boosts appeal of nominally high-risk assets
* GFMS sees gold peaking above $2,000 late 2012/early 2013 (Updates prices, adds comment)
By Jan Harvey
LONDON, Jan 17 (Reuters) - Gold climbed to its highest in five weeks on Tuesday as German data boosted the euro after several sessions of losses, and as stocks and commodities were lifted by Chinese trade data, which was seen likely to prompt pro-growth measures by Beijing.
The precious metal later eased back below $1,660 an ounce as the euro came under pressure from news the European Commission will take legal steps against Hungary over laws governing its central bank and others, but remained firmly supported.
Spot gold was up 0.8 percent at $1,656.90 an ounce at 1451 GMT, having earlier peaked at $1,667.41, while U.S. gold futures were up $26.60 an ounce at $1,657.40. Prices are up 5.9 percent this year after falling 10 percent in December.
" The issues that have been supportive of gold -- the debt crisis, quantitative easing, lack of economic growth in Europe -- should all still be there," said Citigroup analyst David Wilson. " When we got down to $1,520, $1,530 (in December), you had to think, this is a good point to buy in."
" There are good reasons to see support for gold. There seems to be more confidence in gold at the moment," he added.
While gold's rise since the start of the year has occurred without the benefit of a weaker dollar, it extended gains on Tuesday as the euro rose versus the U.S. unit.
The euro hit the day's high versus the dollar after a strong reading of German business sentiment suggested the euro zone's largest economy was improving despite the bloc's debt crisis.
It is still down on the year, however, and the outlook for the single currency remained negative after Standard & Poor's downgraded the euro zone's EFSF bailout fund by one notch to AA+ following multipleeuro zone downgrades on Friday.
Elsewhere, stocks and commodities rose after data showed China's economic growth in the latest quarter beat expectations but was still its weakest in 2-1/2 years, potentially heralding fresh pro-growth measures from the government.
" The property slowdown has gathered speed and property investment growth slowed sharply to only 12 percent year-on-year in December," said Societe Generale analyst Yao Wei.
" New property starts slowed all the way to only 0.9 percent year-on-year. It indicates that in Q1 2012 the numbers will be very unpleasant. Policy easing will continue."
GOLD SET TO PEAK
Gold may set a record high above $2,000 an ounce in late 2012 or early 2013, but the metal is nearing the end of a decade-long run that has lifted prices by more than 600 percent, metals consultancy GFMS said on Tuesday as it released a closely watched industry report.
" The report does acknowledge that the gold market is nearing the closing stages of its decade-long bull run and that, once the macroeconomic backdrop changes and investment in gold fades - probably some time next year - a secular retreat in the price will unfurl," GFMS said.
India, the world's biggest consumer of bullion, has changed the import duty on gold to two percent of value from the earlier flat 300 rupees per 10 grams and that of silver to six percent of value from 1,500 rupees per kilogram, the government said.
The changes could nearly double duties on both metals. Silver was up 1.3 percent at $30.31 an ounce.
Platinum was up 1.8 percent at $1,519.49 an ounce, having earlier hit a six-week high, while spot palladium was up 2.1 percent at $649.97 an ounce.
" We expect platinum and palladium prices to recover noticeably this year," said Commerzbank in a note. " This should be driven both by robust demand and by problems on the supply side."
" By year's end, platinum is likely to cost $1,850 a troy ounce - palladium at this time should be trading at $850 a troy ounce," it added. (Editing by Keiron Henderson)
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