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Gold & metals

Gold: 2011 recap and what you should expect in 2012

Gold Core
With just a few trading days left in 2011, we can take stock of gold’s performance vis-à-vis other assets. Gold is 13.7% higher in USD, 12% higher in GBP and 14.4% higher in EUR. Gains were seen in all fiat currencies and even stronger performing fiat currencies such as the CNY (yuan) and JPY (+9% and +8.75% respectively).


Stock markets globally had a torrid year with the S& P500 down 1.3%, the FTSE down 8% and the CAC and DAX down 19% and 15% respectively. Asian stock markets also fell with the Nikkei down 17%, the Hang Seng 20% and the Shanghai SE down 22%.


The MSCI World Index fell 9%.


Thus, gold again acted as a safe haven and protected and preserved wealth over the long term.


While gold reached record nominal highs at $1,915/oz in August, it is important to continually emphasize that gold remains well below the real high, adjusted for inflation, in 1980 of $2,500/oz.


Gold today at $1,625/oz is 18% below the record nominal high of $1915/oz in August 2011. More importantly, gold remains 46% below its real high of $2,500/oz.


Since 2003, we have said that gold would likely reach the real high from 1980 for a variety of important fundamental reasons – such as global debt levels, global demographics and geopolitical, macroeconomic, monetary and systemic risk.


Money Creating Central Banks Push Gold to Nominal Records


Global money supply continued to rise in 2011 and helped push gold prices to all-time highs on the fear of currency debasement. If accommodative monetary policies continue as the dominant tool for central banks, precious metals will almost certainly continue to benefit.


Were this trend to turn, responsible monetary policy actions could hinder returns. We see no prospect of this in the short term – and little prospect in the medium term.


Gold Diversifying Central Banks Should Support Demand


Central banks have bought about 30 million ounces of gold since March 2009, about 12% of global demand on trailing 10-quarter basis. As central banks focus on stimulating growth, negative real interest rates in developing nations should continue to push diversification of foreign exchange reserves, which may encourage bullion purchases.


Central bank gold reserves are likely to return to the levels seen in the 1970’s and 1980’s due to a significant reappraisal of monetary risk and a recognition of gold’s increasing importance as a monetary asset.


China Adds Gold in Diversifying Foreign Holdings


China, one of the largest buyers of U.S. Treasuries, has publicly said that it intends to continue to diversify its foreign-exchange holdings. The total volume of China's Treasury holdings appears to be showing the first yoy declines in 10 years while gold reserves continue to increase by about 30% a year.


Creditor nation central banks gold holdings remain very small when compared to western debtor nation gold holdings which are generally well over 50%.


It is important to note that the People’s Bank of China’s gold reserves (officially at 1,054 tonnes) remain very small when compared to those of the U.S. (8,133 tonnes) and indebted European nations - such as Italy with 2,452 tonnes.


China's growing gold reserves are miniscule when compared with China’s massive foreign exchange reserves of over $3.1 trillion. The People’s Bank of China is almost certainly continuing to quietly accumulate gold bullion reserves. Common sense alone strongly suggests that they are.


As was the case previously, the Chinese government will not announce their gold bullion purchases to the market in order to ensure they accumulate their gold reserves at more competitive prices. They also do not wish to create instability or falls in or runs on the dollar and or euro – thereby devaluing their sizeable reserves.


Iceland Shows How Forex Crises Move Gold


The steep declines of Iceland's krona in 2008 and Argentina's peso in 2002 show how gold can outperform in a depreciating currency. As the likelihood of default increases, the bulk of the gains in gold priced in the currency are realized within the first few months.


The people of the so called “PIIGS” - Portugal, Italy, Ireland, Greece and Spain – are all at risk of currency devaluations. Some estimate the risk as high, others low but investors and savers in these countries should protect themselves by having an allocation to gold that will protect them from “bank holidays” and currency devaluations.


Currency Wars and Competitive Currency Devaluations
However, it is not just the “PIIGS” who are at risk. The risk in periphery European nations will likely be of a sharp overnight or weekend devaluation (or a series of such devaluations) and reversion to their national currencies. However all nations, PIIGS and non PIIGS alike, are at risk of currency devaluations and currency wars.


Currency wars and the debasement of currencies for competitive advantage poses real risks to the long term stability and prosperity of all democracies in the world and to the finances and savings of people in all countries.


Falling Faith in Currency May Spur Gold Deliveries


Current market turmoil is likely to continue and may even deepen. The prospect of sovereign defaults is real which could see confidence in paper assets, particularly sovereign debt, further erode. Contagion means that even AAA rated debt is no longer risk free.


Institutions and high net worth and retail clients taking physical delivery of gold given a decline in confidence would put pressure on exchanges to deliver because the amount of metal represented in open interest is nearly six times (5.8) the amount of metal in inventory.


Gold Remains An Historically and Academically Proven Safe Haven


Forgive us for continually emphasizing how gold is a historically and academically proven safe haven. We feel it is very important that investors and savers understand this and are frustrated by the continuing significant degree of ignorance regarding the gold market and gold’s role as a diversification, a store of wealth and a wealth preservation asset.


Some of the media and some experts continue to focus solely on gold’s price and not its value as a diversification for portfolios. Many economists and other experts have been suggesting that gold is a bubble for a number of years and suggested that again at the beginning of 2011 and again recently.


Is Gold a Bubble?


Whether gold is a bubble or not is not the fundamental question. What is far more important is that there is now a large body of academic and independent research showing gold is a safe haven asset.


Numerous academic studies have proved gold’s importance in investment and pension portfolios – for both enhancing returns but more importantly reducing risk.


The importance of owning gold in a properly diversified portfolio has been shown in studies and academic papers by Mercer Consulting, Bruno and Chincarini, Scherer, Baur and McDermott, Lucey, Ciner and Gurdgiev and by the asset allocation specialist, Ibbotson.


An academic paper, ‘Hedges and Safe Havens – An Examination of Stocks, Bonds, Oil, Gold and the Dollar' by Dr Constantin Gurdgiev and Dr Brian Lucey and was presented in November at a conference hosted by the Bank for International Settlements, the ECB and the World Bank.


This excellent research paper clearly shows gold's importance to a diversified portfolio due to gold's " unique properties as simultaneously a hedge instrument and a safe haven."


Oxford Economics research on gold in July 2011, showed how gold is a good hedge against inflation as well as deflation.


Only last week, more excellent independent research was released confirming gold's unique role as a diversifier and foundation asset in the portfolios of investors, especially at a time of heightened currency, investment and systemic risk.


The independent research once again confirms the importance of gold as a portfolio diversifier to investors and as a store of wealth.


Conclusion – Gold in 2012
Many market participants and non gold and Silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” major change in the fundamental supply and demand situation in the gold and silver bullion markets – particularly due to investment and central bank demand from China, the rest of an increasingly wealthy Asia and creditor nation central banks.


Support for the price of gold should come from the rising global money supply coupled with increasing investor and central bank purchases which have been driven by falling real interest rates and concerns about the euro, the dollar and other fiat currencies as stores of value.


Tighter monetary policies, as seen in the late 1970’s, would likely help alleviate fears of further currency debasement but it is extremely unlikely that this will be seen in 2012.


Indeed, ultra loose monetary policies, debt monetization, competitive currency devaluations and global currency wars look set to continue – if not intensify.


Gold will likely reward investors internationally in 2012 as it did in 2011 and will again be an essential diversification for anyone wishing to protect and grow wealth in what will be a very volatile 2012 and in the coming volatile years.


Source: goldcore

 

December 22, 2011 • 00:10:40 PST

Pierre Lassonde - This Gold Bull Market is Far From Over

European Central Bank reserve and their reserves have doubled in the last three years, which means they are printing money. But not telling anybody... read more

 

 

 

 

Gold edges down as Europe debt worries persist

* Tight liquidity remains a concern in the market
    * Spot gold could fall to $1,596/oz - technicals
    * Coming up: Italy, austerity vote

 (Updates prices)	
    By Rujun Shen	
    SINGAPORE, Dec 22 (Reuters) - Gold prices inched down
in thin trade on Thursday as investors remained sceptical of the
euro zone's ability to tackle its debt crisis after the European
Central Bank's latest moves to keep credit flowing in the
region.	
    Banks gobbled up nearly 490 billion euros in three-year
cut-price loans from the ECB, easing immediate fears of a credit
crunch, but investors doubted if such measures could help solve
the debt crisis, leaving equities and the euro under pressure
and pushing up Italian and Spanish bond yields.
   	
    News from the euro zone will continue to dominate the mood
in financial markets. Later in the day, Italian Prime Minister
Mario Monti will face a confidence vote on approving an
austerity package. 	
    " We will probably be trapped in the range of $1,575 and
$1,650 until the year-end,"  said a Hong Kong-based dealer, " The
market is still focused on the euro zone -- if there will be new
agreement, if the euro zone economy will slide next year, etc." 	
    Spot gold edged down 0.2 percent to $1,612.35 an
ounce by 0724 GMT, off a one-week high of $1,641.50 hit in the
previous session.	
    U.S. gold was little changed at $1,614.60.	
    Technical analysis suggested that spot gold could fall to
$1,596 during the day, as a rebound from the Dec. 15 low of
$1,560.36 has been completed, said Reuters market analyst Wang
Tao. 	
    	
    	
    Trading volumes were thin ahead of holidays, as many traders
have closed books for the year. Even the start of a new year in
less then two weeks is unlikely to instantly rekindle enthusiasm
due to the tightened liquidity. 	
    " If we don't see any change on the policy front, the tight
liquidity will extend into the new year,"  said Hou Xinqiang,
analyst at Jinrui Futures in China.	
    But Hou said the anticipation of easing monetary policy in
the world's major economies -- the United States, China and
Europe among others -- later in the year would buoy commodities,
including gold.	
    SPDR Gold Trust, the world's biggest gold-backed
exchange-traded fund, said its holdings fell 12.1 tonnes from
the previous day to 1,267.878 tonnes, the lowest since early
November. 	
    The ETF has lost 30.656 tonnes in holdings so far this
month, but its holdings were still on course for a monthly gain
of more than 35 tonnes, just as cash gold prices were headed for
their first quarterly decline in more than three years.	

 

GOLD    STI  

 

 

 

Will Kim Jong-Il's death hit Asian gold prices?21 December 2011 

 

  LONDON (Commodity Online):  The news of the death of North Korean leader Kim Jong-Il did not affect Asian  Goldprices notably, but if tensions rise, gold could eventually be a beneficiary, said HSBC in a research note.

The bank’s Asian economist says there is little near-term risk of an immediate rise of military tensions between North Korea and South Korea, which could be why gold didn’t react. If the North Korean power transition is more difficult than it was when Kim Jong-Il assumed power, then it could lend some modest support to gold, the bank said.

Further, recent demonstrations in Russia, questioning the fairness of recent parliamentary elections, may also supportGold  prices.

“Although geopolitical risk traditionally has a secondary influence on gold, an uncertain transition of power in North Korea and civil unrest in Russia, as well as uncertainty about how the West will deal with Iran’s nuclear program, have the potential to support gold prices,” HSBC concluded.

 

 

Closing Gold & Silver Market Report – 12/21/2011

By  Peter LaTonaDecember 21, 2011

 

Gold steady as Europe debt worries persist

 


SINGAPORE, Dec 22 (Reuters) - Gold prices traded steady on Thursday, after a European Central Bank tender failed to boost market confidence in the euro zone's ability to tackle its debt crisis and knocked gold off a one-week high in the previous session. FUNDAMENTALS

* Spot gold edged down 0.1 percent to $1,613.05 an ounce by 0044 GMT. U.S. gold inched up 0.1 percent to $1,615.40.

* Banks gobbled up nearly 490 billion euros in three-year cut-price loans from the European Central Bank on Wednesday, easing immediate fears of a credit crunch but leaving unresolved how much will flow to needy euro zone economies.

* But the ECB tender failed to impress market participants who doubted if such measures could help solve the euro zone debt crisis, which drove Italian and Spanish bond yields higher and the euro lower.

* U.S. home sales rose in November, adding to hints of recovery, but updated data showed the housing crash was much deeper than previously thought. MARKET NEWS

* Technology shares slumped on Wednesday and pushed the Nasdaq down 1 percent after Oracle reported results that cast doubts on the sector's health, even as broader markets closed mostly flat in a thinly traded day.

* The euro was on the defensive against the dollar on Thursday, having shed all the week's gains as investors doubted a massive 489 billion euro tender by the European Central Bank (ECB) would solve the EU debt crisis.

 

 

 

 

 

 

 

 

Whenever one gets a huge washout breakdown day, as was experienced in the gold market on December 14, the gold bears come out of the closet declaring that the gold bull is dead. Well-known columnist and analyst Dennis Gartman did so the day before, declaring that he was out of gold and that he is seeing " the beginnings of a real bear market, and the death of a bull." Mr. Gartman was not the only one, as others were also touting the end of the gold bull market and saying that the bubble had burst.

Above is a weekly chart of gold from the bottom of the market in 2001. Actually there was a double bottom in gold in the $250 zone, first in 1999 and again in 2001. The weekly chart since then is a classic stair step market with a series of higher highs and higher lows. At no time since the bull market got underway in 2001 has a yearly low taken out the previous year's low, an event that could signal the end of a bull market. Even during the financial crash of 2008, the low that year did not take out the 2007 low.

As for a bubble - well, a bubble is a very emotional market. Not only does the market go higher, it goes higher than most people can imagine, and to valuations that are often unimaginable. Except that gold, unlike a stock, has no valuation except what people are willing to pay for it. But bubble markets just go relentlessly up with only shallow pullbacks. When the bubble bursts the market normally crashes. Gold has not been in a bubble market as the stair step action with a series of constant corrections is instead more indicative of a powerful bull market.

Gold is an alternative currency. Gold goes up in value as currencies (paper or fiat money) go down. Gold has been currency for 3,000 years. Some say 6,000 years. Just because the world has not been on a gold standard since August 1971 doesn't mean that gold no longer has monetary value. During the Great Depression, Roosevelt revalued gold upward, from just over $20 an ounce to $35, a 70% increase during a period when the stock market was collapsing 89%.

Gold cycles are difficult to pinpoint because the world has had free-trading gold only since the early 1970s. Ray Merriman believes gold has a 25-year cycle. His only observation thus far was a distinct low in 1976, and 25 years later the double bottom low in 1999 and 2001. The next major trough would not be due until 2024, plus or minus four years.

Further data is seen if the 25-year cycle is divided into three 8.5-year sub-cycles. Here there were significant lows in 1976, 1985, 1993, and the double bottom in 1999 and 2001. Assuming the double bottom was the end of the 25-year cycle, then the low in October 2008 was probably the first sub-cycle low of the current 25-year cycle. If that is correct, then a new 8.5-year cycle is underway. That was confirmed when gold broke out above $1,015 in September 2009, since $1,015 was the top of the previous cycle (seen in March 2008). Breaking out to new highs confirmed that the cycles remain in a long term bull market.

The 8.5-year cycle can be further sub-divided, giving us two 4.25-year cycles or three 34-month cycles. Dividing by three is the classical way of dividing cycles. During the first 8.5-year cycle, the 34-month cycle was observed in April 2003 and June/October 2006. That suggests that the final 34-month low might have been due sometime in 2009. The more powerful 8.5-year cycle low appears to have overridden that when it arrived in October 2008.

The first 34-month cycle low following that 8.5-year cycle low was thus due in July 2011, give or take four months. It is now December, so that cycle may still be in effect as it seeks to find its final low. One cannot confirm that this is the 34-month cycle low until the market breaks out to new highs above $1,910. And one cannot confirm that the low is in until the market begins the climb back and makes no further lows. The huge drop of upwards of $100 on December 14 is the kind of washout day one often sees at significant lows.

There are some similarities between the current market and the 34-month cycle low seen in 2006. That particular cycle low is circled with an ellipse on the chart. Note the similarities in the patterns including the pause that occurred on the way to the top in both May 2006 and September 2011. In 2006 that pivot was seen in February, and in the current cycle it was seen in April/May 2011. Repetition of technical patterns is not unusual in technical analysis. If the gold market can regain and break out over $1,725 in the next few weeks it would begin to confirm that a low is in.

There is some room to move lower on this current move. Strong support comes in around $1,525. A breakdown under $1,500 would certainly change the scenario and be of greater concern. The low for 2011 was seen in February and was near $1,325.

There are few signs that the bull market in gold is over. Most of the selling over the past few days has come in the paper gold market (futures) as positions were stopped out or stop sells were hit at technical levels. Unlike the broader markets, gold is still up 11.5% in US$ in 2011. Most markets are down on the year.

If this is as COTW suspects, the next 34 month cycle low would not be due until 2014. If gold is to remain in a bull market, the next 34-month cycle would also be higher than the current one.

A more important support zone is at $1,470. This is the area of a low seen on the way up to the highs at $1,910. If that were to break, it would suggest that a more serious bear is underway and that the current 8.5 year cycle may also have topped.

Despite the sharp shakedown seen on December 14 gold remains in a bull market. The conditions that created the gold bull market remain in place. The global debt deleveraging remains a work in progress and as governments print money in an attempt to slow down or stave off the collapse their currencies are devalued. These remain ideal conditions for gold as an alternative currency.

Possibly the best advice comes from renowned gold market analyst Jim Sinclair. A couple of days ago he wrote: " Close your eyes, cover up with puppies, turn the heat down, light a wood fire and take a nap. Gold is headed for $4,500 in the normal manner it always does - 5 steps forward and 4 back. RELAX!"

---

copyright 2011 All Rights Reserved David Chapm

 

 

 

Morning Gold & Silver Market Report – 12/21/2011

By  Ryan SchwimmerDecember 21, 2011

 

Strong dollar rally will crush gold and stocks in 2012 amidst severe deflation

 

By Clive Maund
Last week saw a severe breakdown in the Precious Metals sector that is now viewed as marking the start of a bearmarket, and that means the  onset of a deflationary episode that is likely to prove more serious than that we witnessed in 2008, because it will involve countries going bust rather than " just" banks and large corporations as was the case in 2008.

At first glance gold's 3-year chart still doesn't look too bad, with its price in the vicinity of a still rising 200-day moving average, but last week it broke below this average for the first time since 2008, which is in itself a serious warning, and ominous developments on the charts for  Silver  and the Precious Metals stocks indices, strongly suggest that  gold is in the process of completing an important top area, which looks like it is taking the form of a bearish Descending Triangle.

Momentum as shown by the MACD indicator, is now firmly in negative territory, and failure of the important support level at the lower boundary of the suspected Descending Triangle will  Lead  to a severe decline as shown.

The dollar  broke out above an important resistance level, negating a potential Double Top, as we can see on its 6-month chart below, although the breakout is not as yet by a decisive margin. This has opened up the possibility of  another strong upleg by the dollar, which is of course what we would expect to see if deflation strikes.

How far could the dollar rally?  The 5-year chart gives us a good idea - it could run swiftly to the 88 - 89 area during a major deflationary episode.

If the PM sector is signalling a major deflationary episode, then we should see signs of topping action in the broad stockmarket, and we do. A large Head-and-Shoulders top is completing in the S& P500 index, and with the index high in the Right Shoulder we are believed to be at an excellent point go short, buy bear ETFs etc

Let's stand back a moment now to consider the  larger implications  of all these developments on the charts.  The breakdowns now occurring across the PM sector are an indication that the forces of deflation are set to assert themselves and come to the fore. These forces have always been there, lurking in the background since the first major deflationary convulsion back in 2008, and  their intent is to cleanse the world economic system of the dross of the gargantuan debt and derivatives overhang that is bringing the world economy to a dead stop.

The key point to understand here is that  these forces may be kept at bay for a while but they cannot be stopped  - and creating even more debt and derivatives in an effort to stave off their impact, which is what central banks and governments have been doing since 2008, simply creates a more disastrous situation later on. Thus the accelerated ramping of the money supply and the maintenance of " zombie banks" and the propping up of bond and stockmarkets is an open invitation to disaster on a massive scale.

There is also a widespread assumption that that the entrenched powers that be, Goldman Sachs, the Republican Party etc are unassailable and immortal - that's what the Tsar of Russia and his family thought before they were summarily shot by the Bolsheviks in 1918. Nothing is forever.

2012 is going to suck - it probably won't be as bad as the movie " 2012" , but it's going to suck. Prepare yourselves as best you can


Source:  clivemaund 

 

  December 21, 2011 • 04:38:12 PST

London Trader - There Are Tremendous Silver Shortages

Silver isn’t there, there are people who purchased SLV to own physical silver, but all they have is shares that aren’t backed by the physical silver.  Read More

 

 

China gold turnover surges 77% after price crash, huge demand pushes up premiums

  21 December 2011 at 11:05 IST

 

  Gold Core

Last week's price drop has stimulated demand from Europe and the Middle East and Asia with GoldCore and other dealers confirming still robust demand and little or no selling of bullion.

Gold bar premiums in Singapore and Hong Kong rose from last week, as demand is expected to increase during the upcoming Chinese New Year holidays and buying interest has returned after last week’s price drop.  Premiums in India have also increased.

Demand from China ahead of the Lunar New Year in late January should help support prices. While demand may not be on the massive scale seen last year – demand will likely be very high again which makes  Gold  well supported at these levels.

Reuters report that Societe Generale points out in a note this morning that turnover on the  Shanghai Gold Exchange was at record levels yesterday morning. " After an average daily turnover of 6.5 tonnes during November, volumes have averaged 11.5 tonnes daily since the 12 December, when gold had dropped below $1,700," Soc Gen said.

This means that  average daily turnover on the SGE is up a significant 77% from levels seen in November  suggesting that China’s influence on the gold market may be reasserted  in the coming days.

Goldman Sachs gave a three-month price view on  Gold  of $1,785 an ounce in a note today, a six-month view of $1,840 and a 12-month view of $1,940.

As long as cheap money and “bail outs” remain the misguided ‘grand solution’ implemented by politicians and bankers in Europe and internationally, gold’s bull market appears very sound.

As each solution fails, a bigger ‘bazooka’ is proposed and now comes the ‘nuclear bazooka’ of a multi trillion dollar bailout of Europe by the ECB, aided by the IMF and the Federal Reserve. Who will bail out Japan, the UK and the US from their coming debt crises?

An unsustainable mountain of debt will not be solved by creating more debt no matter how complex or what complicated structure is used.

Debt write downs, bankruptcy and a planned downsizing of our banking system and the gradual deleveraging of our financial system remains the real solution to this crisis.

Unfortunately, this remains taboo amongst many politicians and many of the so called experts that helped create the current financial and economic crisis.

Source:  goldcore

 

    By Rujun Shen	



    SINGAPORE, Dec 21 (Reuters) - Gold rose to a one-week
high on Wednesday, extending gains from the previous session, as
upbeat economic data from the United States and Germany boosted
market sentiment and a weaker dollar lent support.	


    The euro edged higher, riding on a sharp rise in German
business sentiment and strong demand for Spanish debt, with
investors watching the European Central Bank's first offer of
three-year loans to banks that many hope will help the region's
banks lower their funding costs.  	


    On the chart, spot gold pierced above the 200-day moving
average, seen as a key support since 2008 until a week earlier
when prices plunged. 	


    " The rebound in gold today is related to the currency
market,"  said Dick Poon, manager of precious metals at Heraeus
in Hong Kong. " But we don't see much fresh buying from investors
as the year end nears." 	


    Poon said gold could rise towards $1,650 by the end of the
year, but the thinning trading volume could lead to great
volatility in prices.	


    Spot gold rose as much as 0.8 percent to a one-week
high of $1,627.65 before easing slightly to $1,625.85 an ounce
by 0339 GMT. It rallied 1.3 percent in the previous session.	


    U.S. gold gained 0.6 percent to $1,628.	
    	


    Holdings of SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, remained unchanged for a third
consecutive session at $1,279.975 tonnes by Dec 20. 	


    " What surprised me is holdings of gold ETFs are still
holding up despite the recent sell-off, which is a good sign," 
said Dominic Schnider, head of commodity research at UBS Wealth
Management.	


    But gold is unlikely to visit its historical high any time
soon as uncertainties around the euro zone debt crisis and
global growth have created a liquidity crunch that hurts gold's
sentiment as much as it hits riskier assets.	


    " Gold is not the asset of choice on a search for liquidity.
It gives you comfort against currency risks, inflation,
sovereign debt problems, but not liquidity crunch." 	


    Spot platinum hit a one-week high of $1,441.50 and
eased to $1,435.50, up half a percent from the previous close.
Spot palladium rose 0.7 percent to $627.29. 	


    Barclays Capital suggested that in the first quarter
investors build length in markets where fundamentals are most
supportive, including copper, platinum group metals and gold.	


    " Across the metals sector and arguably for commodities as a
whole, supply constraints look tightest in the PGMs,"  it said in
a research note, adding that the deteriorating output in South
Africa and Russian palladium stockpiles that are widely believed
to be near exhaustion would trigger a drop in platinum and
palladium supply next year.	


  

  

 

Closing Gold & Silver Market Report – 12/20/2011

By  Brandi BrundidgeDecember 20, 2011

 

     

 

Morning Gold & Silver Market Report – 12/20/2011

By  Geoffrey VarnerDecember 20, 2011

 

* Gold prices firm in line with euro, but jitters remain

* Price action seen " weak but volatile" into year-end

* South African platinum exports to Switzerland jump in Nov (Updates throughout, changes dateline, pvs SINGAPORE)

By Jan Harvey

LONDON, Dec 20 (Reuters) - Gold prices rose in Europe on Tuesday as the euro strengthened versus the dollar, but gains were capped by concerns that policymakers' efforts to address the euro zone debt crisis are falling short and could keep European assets under pressure.

Spot gold was up 0.8 percent at $1,606.00 an ounce at 1012 GMT. While spot prices are still up more than 12 percent this year, analysts say they will likely struggle for traction from here if the dollar starts strengthening again.

The dollar's gains versus the euro on the back of the crisis have weighed on gold in recent months, putting the metal on track for its first quarterly loss in more than three years.

" All the bull-run dynamics are still in place, but you have this trend of the strengthening dollar, positive data out of the United States as opposed to weak data out of Europe," said VM Group analyst Carl Firman.

" A strengthening greenback has traditionally seen gold in dollar terms decline, and that is what we're seeing. For a safe haven, you're looking at the dollar really. There's a lot of volatility in gold, in commodities, in other asset classes."

The euro rose 0.4 percent versus the dollar after yields at a Spanish treasury bill auction came in lower than expected, triggering stop-losses on some short positions in the single currency. Sentiment towards the unit remained fragile however, as concerns over the debt crisis lingered.

Euro zone ministers agreed on Monday to boost IMF resources by 150 billion euros to ward off the debt crisis and won support for more money from EU allies, but it was unclear if the bloc would reach its 200 billion euro target after Britain bowed out.

" The broader market continues to be dissatisfied with policymakers' reluctance for the ECB to become the lender of last resort or boost the euro area stability fund," said Andrey Kryuchenkov, an analyst at VTB Capital.

European shares, meanwhile, rose after better-than-expected German business sentiment data, while safe-haven German bunds fell.

 

GOLD SET TO STRUGGLE

Gold prices are set to struggle to make up significant ground for the rest of the month, with traders wary of adding to long positions before year-end, analysts said.

Gains are unlikely unless they can move back above their 200-day moving average, a key technical level breached last week, just above $1,620 an ounce.

" Profit-taking and year-end book squaring by large investors, including mutual funds and macro hedge funds... help explain the recent drop in prices," said HSBC in a note.

" Gold prices may stay weak but volatile for the rest of this year, we believe, as trading volume is likely to dry up in the run-up to the year-end holidays."

Last week's price drop has stimulated some demand from Europe and the Middle East, dealers say. Beyond that, analysts say demand from China ahead of the Lunar New Year in late January could help support prices.

Among other precious metals, silver was up 1.8 percent at $29.25 an ounce, tracking gold. Spot platinum was up 1 percent at $1,419.50 an ounce, while spot palladium was up 1.6 percent at $613.71 an ounce.

Swiss trade data released on Tuesday showed Russia exported 5.16 tonnes of palladium to Switzerland in raw, powdered and semi-finished form in November.

Russia is the world's biggest palladium supplier, selling both mined metal and government stockpiles onto the market. Speculation that its official stocks may be close to exhaustion have pushed up prices in recent years.

That statistics also showed South African platinum imports reached their highest monthly level this year in November, at 3.7 tonnes.

" The surge in metal shipments from South Africa could be an early warning sign which suggests that idle metal which is not taken up by industrial users is now being parked in the Swiss clearing system," said Swiss bank UBS in a note. (Reporting by Jan Harvey Editing by Alison Birrane)

 

 

SINGAPORE, Dec 20 (Reuters) - Spot gold hovered below
$1,600 an ounce on Tuesday, as investors' attention remained
glued to the development of the euro zone's debt crisis after
the bloc's ministers failed to boost IMF resources to a targeted
200 billion euros. 	

    	
    FUNDAMENTALS	

    * Spot gold edged up 0.4 percent to $1,598.39 an
ounce by 0039 GMT. 	
    * U.S. gold gained 0.3 percent to $1,600.80.	
    * The European Central Bank said that the risks to financial
stability in the euro zone have increased considerably in the
second half of this year, but a break-up of the single currency
bloc is unthinkable. 	
    * Euro zone ministers agreed on Monday to boost IMF
resources by 150 billion euros to ward off the debt crisis and
won support for more money from EU allies, but it was unclear if
the bloc would reach its 200 billion euro target after Britain
bowed out. 	
    * U.S. homebuilder sentiment improved in December, rising to
its highest level in a year and a half and reinforcing the view
the housing market is slowly healing. 	
    * News of the death of North Korea's leader Kim Jong-il
created uncertainty in the region, which drove investors to
abandon riskier assets in favour of the dollar. 	
    

    	
    MARKET NEWS	

    * Banks dragged the U.S. stock market lower on Monday, with
losses accelerating late after Bank of America's stock price
fell below $5 for the first time in nearly three years. 	
    * The euro traded steady on Tuesday, after falling in the
previous session on comments from the ECB President Mario Draghi
on the risks to euro zone economic growth arising from the debt
crisis.