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Morning Gold & Silver – 2/23/2011
By Timothy OakesFebruary 23, 2011At 8:12 AM (CT) the APMEX precious metals prices were:
- Gold price - $1403.40
- Silver price - $33.16
COMMENTARY: The major news at the start of the day still revolves around the Middle East political unrest. According to the Italian Foreign Prime Minister Franco Frattini, “We believe that estimates of about 1,000 [deaths] are credible.” Unlike Egypt, which is an ally to the United States and has been for many years, Libya has always been an adversary, which means the United States has very little influence in the country or its politics. Libya also controls 2% of world oil output which is causing a sharp increase to oil prices.
In domestic news, stocks seem to be rebounding overall in early morning futures purchases and early morning trading seems to be on the rise as well. The safe haven appeal of precious metals is definitely still very clear.
Gold spot price is up $1.80 – Silver price is up 22 cents
Feb 23 (Reuters) - Gold prices edged back above $1,400 an ounce in Europe on Wednesday as ongoing unrest in the Middle East and North Africa supported the precious metal near seven-week highs.
Closing Gold & Silver Market Report 2/22/2011
By Michael HaynesFebruary 22, 2011At 4PM (CT) the APMEX precious metals prices were:
- Gold price - $1,399.60
- Silver price - $33.11
- Platinum price - $1,792.00
- Palladium price - $806.30
COMMENTARY: Gold and silver are still up on the day in response to the unrest in the Middle East, whereas platinum and palladium traded down due to their industrial ties. Oil futures have soared to their highest since 2008, with American consumers paying 50 cents more than this time last year with a 6 cent jump since last week. Oil analysts say that it could jump an additional 33 cents a gallon by the summer driving season. U.S. stocks fell sharply today, with the DOW industrials taking its worst single day hit in over three months as a result of the rising violence in Libya, a large oil producer.
This type of rise in futures and consumer costs with addition to the drastic losses in the stock markets brings a clear and present fear of inflation which in turn drives consumers to the safe-haven of precious metals.
Silver prices are rising fast, take advantage of the 100 oz silver bars while they are still in stock!
Gold spot price is up $10.50 on the day. Silver spot price is up $.74. Platinum spot price is down $51.30. Palladium spot price is down $53.50.
China gold investment demand surges 70%
February 22 2011
BEIJING (Commodity Online) : World’s second largest gold consumer China’s investment demand for the commodity jumped 70% year on year in 2010 due to the domestic inflationary pressure and limited investment alternatives.
According to WGC China, in the fourth quarter of 2010, gold investment value in China increased more than 100% to 17 billion yuan while the gold investment for the full year was 48 billion yuan, 113% more than a year ago.
Bullions are always out of stock in China in recent months, said Wang Lixin, a senior official at WGC China, adding that China's continued inflation pressure and the government's policies to rein in the property market are main motivators for the booming gold investment demand.
China's consumer price index, a gauge of inflation, hit a two-year high to 5.1% in November, and the figure was 4.6% in December.
The central government launched a series of policies to cool down the fast-growing property prices. It increased the housing loan threshold and restricted house purchases in key Chinese cities.
LONDON, Feb 22 (Reuters) - Gold fell on Tuesday, following six days of gains, as a rising dollar outweighed safe-haven demand arising from violence in the Middle East, and silver retreated from Monday's 31-year peaks.
Deadly protests in Libya pushed oil prices to 2-1/2 year highs, fanning fears of inflation and undermining investor confidence in the global economic outlook.
Libyan leader Muammar Gaddafi vowed defiance in the face of a mounting revolt against his 41-year rule on Tuesday, making a fleeting television appearance to scorn protesters and deny he had fled the country.
The gold price has risen by nearly 5 percent this month as protests in favour of democratic reform across North Africa and the Middle East turned bloody. Investors have grown increasingly uneasy that the crisis could spread.
Spot gold XAU= was last down 0.6 percent at $1,394.14 an ounce at 1235 GMT, having risen on Monday to its highest in about seven weeks. U.S. April gold futures GCJ1 were up 0.7 percent at $1,398.50 an ounce.
" It's not all one-way traffic," said Credit Agricole analyst Robin Bhar. " Obviously, we've had the turmoil escalating in the region and jitters and it's all understandable. Maybe this is the top for the time being."
He added, " Those safe-havens -- the dollar, Treasuries and gold -- should stay in demand, and other riskier assets such as equities and copper and so on will get sold off as we've seen in the last 12 hours or so."
LIBYA IN FOCUS
The dollar rallied broadly, creating a headwind for gold as the escalating tension in Libya prompted selling in higher-yielding assets such as the euro EUR= in favour of the U.S. currency and the Swiss franc CHF=.
" The current situation there is really akin to a keg of dynamite," said Ong Yin Ling, an investment analyst at Phillip Futures in Singapore.
" Whether Gaddafi will be toppled or whether we will witness a revolution, I think the final outcome is still uncertain. But the situation is likely to get worse before it gets better. Going forward, (gold) could still remain supported due to the crisis, which is unlikely to be resolved anytime soon."
Gold, like Treasuries and the Swiss franc, tends to draw a bid from investors in times of political or financial turmoil as it did in 2010 with the euro zone debt crisis.
Gold is still 2.7 percent below December's record high of $1,435.90 an ounce, but dealers in Asia reported a pick-up in sales of scrap after the spot price's near-4 percent rise over the prior six sessions. [GOL/AS]
Silver XAG= came under pressure in line with other industrial commodities, falling by as much as 4.3 percent to a low of $32.39 an ounce, as investors closed their positions following a three-day rally that lifted prices by nearly 4 percent.
It later traded at $33.15 an ounce.
The price on Monday hit its highest since early 1980 above $34 an ounce, driven by limited supplies for near-term delivery and the prospect for rising demand as the wider economy recovers.
The gold-silver ratio, used to measure how many ounces of silver can buy one ounce of gold, fell on Monday to a 13-year low around 41, reflecting silver's recent outperformance over gold.
Platinum and palladium fell in line with base metals.
Data from Switzerland, a major clearing hub for platinum group metals in Europe, showed palladium exports reached their highest since July 2010.
Exports of palladium, used mainly in catalytic converters for gasoline-powered vehicles, rose to 9,938 kg from 6,374 kg in December, the largest amount since 11,731 kg in July last year. Spot palladium XPD= was last down 2.7 percent at $830.50, while platinum XPT= was down 1.5 percent at $1,818.74.
(Additional reporting by Lewa Pardomuan in Singapore Editing by Jane Baird)
Morning Gold & Silver Market Report – 2/22/2011
By Peter LaTonaFebruary 22, 2011At 8AM (CT) the APMEX precious metal prices were:
- Gold price - $1,403.20
- Silver price - $33.34
- Platinum price - $1,824.00
- Palladium price - $838.40
COMMENTARY: Gold and silver prices are once again on the move as they rebound from overnight profit taking. Gold spot price is up $14.10 and silver price is up 96 cents. These moves are a result of the safe haven appeal of gold and silver. Platinum and palladium on the other hand are diving sharply in conjunction with the stock futures. These two metals are tied to industry and production, so as the economic future dims slightly, their prices will drop. Platinum spot price is off $19.30 and palladium price is down $21.30.
There are several key drivers ramping up fears in the equity markets. First, it appears Libya’s Muammar Gaddafi is willing to use guns, tanks, helicopters and warplanes against his own people in order to put down a revolt. It is reported that people are being shot just for walking the street. An already bloody situation is about to get bloodier.
Moody’s Investors Service issued a warning to Japan that they may cut their sovereign rating if they fail to implement a comprehensive tax reform policy. Today’s warning follows a downgrade by Standard & Poor’s one month ago, which was its first cut in nine years. Together, they are beginning to expose a country that could be in dire financial condition.
On the home front, US single-family home prices fell for the sixth month in a row. Although numbers met expectations, they did not take away fears of a double dip recession for home prices. As the government's home buying subsidies expire, it is likely home prices will only continue to fall.
Gold eases in Asia but stays near $1404
Published on: February 22, 2011 at 12:35
//SINGAPORE (Commodity Online) : Gold prices eased Tuesday after hitting nearly two month high overnight while silver remained at the top.
Spot gold was seen trading at $1404.47 an ounce at 2.00 p.m Singapore time while US gold futures for April was slightly up at $1403.64 an ounce.
Analysts attributed gold’s slightly lower position to hike in the Dollar Index, a six- currency gauge of the greenback’s value, rose 0.6 percent today.
The greenback edged up against a basket of major currencies on Tuesday. Gold typically moves inversely to the dollar.
Analysts however said the precious yellow metal is likely to remain highly volatile and could climb further up as Arab world crisis continued to support it.
Silver prices hit a 30 year high at $34.3187 an ounce before slipping to $33.2925 in afternoon trade Tuesday.
Meanwhile, Palladium decreased 0.4 percent to $855.15 an ounce, after touching $862.25 yesterday, the highest level since 2001. Platinum for immediate delivery fell 0.4 percent to $1,843.25.
Gold slipped after rising to its highest in seven weeks, but sentiment was still underpinned by deadly unrest in North Africa and the Middle East as well as uncertainty over the future of oil prices, while silver jumped to its strongest level since 1980.
Published on: February 22, 2011 at 15:50BANGKOK (Commodity Online): It is wise to hold gold and silver and invest in precious metals during times of war and when geopolitical tensions and economic crisis hit countries around the world, says noted investment advisor Marc Faber.
Faber, who is famous for his prediction of the US stock market crash in 1987, said that commodities, especially gold and silver will be the wise investment options for people in the wake of rising inflation and troubled economies around the world.
Faber, who is the publisher and editor of Gloom, Boom & Doom Report, said that if there is a war, gold and silver would be desirable investments to hold.
“There will be times like the 1990s until 2008 when gold outperformed stocks and vice versa in 2009. But the key is flexibility. We don't know how the world will look in 10 years' time,” he told an investors’ gathering in Bangkok.
Faber said that treasury bills and deposits will no longer be a sure bet against market volatility.
According to Faber, the US Federal Reserve will continue to keep its interest rate below the inflation rate to avoid worsening impacts from the collapse of the credit market, which had expanded to three times the US GDP.
“The US will want to keep a low interest rate and expand the money supply to ease the public debt that stands at four times the size of its economy," he said.
Saying that gold and silver would continue to provide upside gains in the future, Faber said increasing demand for oil in emerging Asian economies and recovering US demand could lead to increasing geopolitical tensions in the Middle East and other oil-producing regions, contributing to upside gains for commodity prices and precious metals.
He also said that the US dollar could rebound in the next few months, but in the long term it would depreciate as the Fed is likely to expand its money-printing measures beyond the $600 billion already announced up to the middle of this year.
SINGAPORE, Feb 22 (Reuters) - Gold slipped on Tuesday after rising to its highest in seven weeks, but sentiment was still underpinned by deadly unrest in North Africa and the Middle East as well as uncertainty over the future of oil prices, while silver jumped to its strongest level since 1980.
High oil prices sparked by violence in Libya fed fears of inflation, one of the main concerns of investors, who are otherwise in a generally bullish mood on expectations that the global economic recovery is now sustainable. Libyan leader Muammar Gaddafi appeared on state television signalling his defiance and saying he had not fled a revolt against his 41-year rule.
" I think the current situation there is really akin to a keg of dynamite," said Ong Yin Ling, investment analyst at Phillip Futures in Singapore.
" Whether Gaddafi will be toppled or whether we will witness a revolution, I think the final outcome is still uncertain. But the situation is likely to get worse before it gets better. Going forward (gold) could still remain supported due to the crisis, which is unlikely to be resolved anytime soon."
Spot gold fell $4.05 an ounce to $1,401.90 by 0308 GMT. It had risen as high as $1,410.65 an ounce as protests that have unseated leaders in Egypt and Tunisia spread to neighbouring states, including Libya.
Bullion was below a lifetime high around $1,430 struck in December.
Libyan forces loyal to Gaddafi have fought an increasingly bloody battle to keep the veteran leader in power with residents reporting gunfire in parts of the capital Tripoli and one political activist saying warplanes had bombed the city.
A bullish target at $1,423.57 per ounce for spot gold remains intact, as its long-term bull trend could have resumed, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.U.S. gold futures for April rose $13.7 to $1,402.3 an ounce.Silver jumped to its highest since 1980 above $34 an ounce on high gold prices and also on hopes of a sustainable recovery in the global economy.Spot silver is seen as making a limited gain to $38.20 per ounce over the next four weeks, as pointed out by a trendline, because the current wave (5) is unlikely to extend, after the wave (3) has travelled a much longer distance as part of a five-wave cycle that started from the Feb. 2010 low at $14.63,
acccording to Wang Tao.The gold-silver ratio, used to measure how many ounces of silver can buy one ounce of gold, fell to a 13-year high around 41. Forward silver was cheaper than cash prices, indicating tightness." Silver is moving so fast. That's scary. But with the unrest and tension in the Middle East and rising oil prices, I reckon it will stay firm," said a dealer in Singapore." Physical silver is definitely one of the reasons why the price is high. I think the silver backwardation has caused the push too."Brent crude oil futures rose by more than $2 to as much as $108.18 per barrel from the previous close on continued fears that violence in Libya could lead to wider disruptions in supply from the OPEC country.In other markets, the dollar edged up against a basket of major currencies, while the Nikkei fell for the first time in seven days, moving away from its highest levels in over nine months, as the Middle East turmoil triggered
profit-taking in overbought blue-chip shares.
SINGAPORE, Feb 22 (Reuters) - Gold extended gains and rose to its highest in seven weeks on Monday as growing unrest in the Middle East and rising oil prices underpinned sentiment, lifting silver to its strongest level since 1980.
FUNDAMENTALS
* Spot gold $3.75 to $1,409.70 an ounce by 0052 GMT as protests that have unseated leaders in Egypt and Tunisia spread to neighbouring states, threatening the grip of long-entrenched autocratic leaders elsewhere.
* Libyan leader Muammar Gaddafi appeared on state television on Tuesday and signalled his defiance over a mounting revolt against his 41-year rule.
* U.S. gold futures for April rose $21.7 to $1,410.3 an ounce.
* Silver jumped to its highest since 1980 above $34 an ounce.
MARKET NEWS
* The U.S. dollar edged up against a basket of major currencies early in Asia on Tuesday, although the Australian dollar eased and could suffer further declines as mounting tension in the Middle East drive investors to cut risk.
* U.S. crude futures extended gains on Tuesday, with the March contract reaching $94.49 per barrel, the highest for any nearby month since October 2008, as concern grew that violence in Libya could lead to wider supply disruptions from the OPEC country.
* Japan's Nikkei average moved away from its highest levels in over 9 months and fell on Tuesday for the first time in seven days as turmoil in the Middle East made investors wary of riskier assets triggering profit-taking on overbought blue-chip shares.
RELATED NEWS > Libya may face civil war as Gaddafi's grip loosens > Libya turmoil prompts oil surge, hits equities > Egypt asks for freeze on Mubarak assets > Yemen's Saleh says won't be forced out by anarchy > Exiled Bahrain opposition leader to return home > New Zealand's Christchurch hit by strong quake > G20 keeps China onboard but tough talks ahead > Ivorian troops kill protesters, AU meets Gbagbo > Iran naval ships plan to cross Suez Canal on Tues > First US drone hits in Pakistan in weeks kill 11 > Russia summons U.S. envoy over Japan dispute > Hamburg rout bodes ill for Merkel in election year
Closing Gold & Silver Market Report – 2/21/2010
By Stephanie ChandlerFebruary 21, 2011At 12PM (CT) the APMEX precious metals prices were:
- Gold – $1,407.50
- Silver – $33.95
- Platinum – $1,854.00
- Palladium – $861.00
COMMENTARY: Since the precious metals market was closed at 12:15 (CT) the prices have held steady, allowing people to take advantage of the prices after such a sharp rise on the morning. Gold has risen above the predicted $1400 mark (the first time in seven weeks) while silver has soared and begun to close the gap between itself and gold, bringing the ratio to its lowest since 1998. One reason precious metals have been on the sharp rise has been due to the chaotic protests in Egypt and Tunisia where protests have unseated leaders for the past month or so and continues to spread throughout the Middle East, threatening all other autocratic leaders. (i.e. violence gets worse in Libya as protestors claim control over their second-largest-city, killing over 300)
Another piece of information that has taken a back-seat to the news of the Middle East is our Federal Government has one week to agree to a budget and make a decision on raising the debt limit or the government will be forced to shut down. Although the G20 seemed to go smoothly over the weekend, there are still hidden tensions with China that will soon have to be faced.
Silver prices are rising fast, take advantage of the 100 oz silver bars while they are still in stock!
Gold spot price is up $18.40 on the day. Silver spot price is up $1.58. Platinum spot price is up $10.70. Palladium spot price is up $1.30.
China's demand for precious metals explodes due to concerns over inflation
| by Goldmoney | |
Published : February 20th, 2011 | |
The Industrial and Commercial Bank of China (ICBC), the world's biggest bank in terms of market capitalisation, announced in a statement yesterday that China's demand for gold literally exploded in 2010. Especially the middle class was eager to diversify its assets in order to hedge against the monthly rising domestic inflation. The majority of gold investors focused on physical gold purchases.
As Zhou Ming, deputy director of the precious metals division at ICBC, told the news agency Reuters yesterday, his institute sold about 15 tons of gold to domestic investors in 2010. It was remarkable that the physical demand among investors had already reached 7 tons in January 2011. So far, all data pointed to a new sales record in 2011.
Zhou explained how China's savers and investors were highly concerned about the drastically rising inflation of the last few months. The central bank People's Bank of China (PBC) had not yet managed to slow down the escalating credit growth among China's domestic banks. The PBC's credit growth target had been highly exceeded in 2010, just as in 2009.
China's gold imports also surged drastically in spite of an 8% increase in the country's gold production. Despite being the biggest gold mining country in the world, China is now advancing to become the world's biggest importer of gold, too. Analysts stated that China would replace the gold savvy India as the world's biggest importer of the yellow metal in the near future.
As Zhou further stated, China's government encouraged the population to make investments in the gold sector, while further liberalising the domestic market. The gold price should therefore expect further support. Zhou explained that the demand in China had started from such a low level that huge growth rates could be expected over a longer period of time. The government hopes that its strategy will slow down future demand in the property sectors of the country's urban centers in order to prevent the bursting of a potential price bubble at the housing markets.
Not only the demand for gold but also for silver had risen strongly in the past year. While the ICBC sold a total of about 33 tons of the white metal in 2010, the physical sales had already reached 13 tons in January this year. Based on the current developments, new sales records were expected in the silver sector as well.
Roman Baudzus
| Can the Middle East “Revolutions” Affect the Gold Price ? | |
| by Julian D. W. Phillips - Gold Forecaster | |
| Published : February 18th, 2011 | |
Recently the economics site: www.FinanceandEconomics.org published an article on " Precious Metals and the validity of Technical Analysis”. We completely agree with the thoughts expressed there and in this piece would like to expand on their thoughts here. Over the last eight years or so we have seen the Technical Analysis approach to the gold price give incorrect signals, when seen in isolation. Many times the technical picture pointed down on the gold price in the face of a strong fundamental picture. We know that this has wrong-footed many gold investors who found themselves waiting for a fall only to see it consolidate then rise. Over the last few years it has done this more frequently until we find at the Gold Forecaster we approach technical analysis in a way that allows for this and complements the fundamentals. Of late some analysts had identified a 'head and shoulders' top and forecast the end of the 'bull' market in gold and silver, but it has not come, nor do we expect it to come. The reason the charts have failed so often to correctly forecast the gold and silver prices has been due to the change in the nature of the market, the change in the type of investors, the change in the number of investors and the change in the location of investors.
The Change in the nature of Gold Markets and those that are not Gold Markets
The traditional gold market comprised central banks and wealthy institutions and individuals in the days of the Gold Standard. Then 'officially' central banks left the gold market and started selling their gold in the market. The market was left to wealthy individuals in the main as miners and central banks worked together to undermine the gold price, taking it back from $850 to $275 from the early 1980' to 1999. Then the central banks of Europe agreed to 'cap' sales under the 'Washington Agreement' and the subsequent 'Central Bank Gold Agreements'. Since the start of the sale of 403.3 tonnes of gold by the I.M.F. [now completed] European central banks have ceased selling gold, to all intents and purposes.
The inception of the gold Exchange Traded Funds was another dramatic market change allowing a cheap and easy way into gold by institutions and wealthy individuals.
The result of these two changes was to remove the central bank overhang from the gold market and to bring institutions and individuals into the gold bullion market in such as way as to affect the gold price.
What is often not understood is that buyers of gold shares in mining companies could never affect the gold price or bullion market. These shares were simply another set of equities. Many have and still do believe that the COMEX futures and options gold market affects the gold price. COMEX themselves will tell you that only 5% of the transactions lead to a movement of physical gold and where they do, the investor must clarify that he wishes to take or give delivery at the time of dealing. These two markets represented a huge amount of money involved in the 'gold' market that did not affect the gold market. To illustrate, a hedge fund recently closed $850 million's worth of positions because COMEX kept increasing it margins payable. The fund is only a $10 million fund.
Any gold price linked or indexed fund, likewise does not involve the purchase of gold. Indeed funds that offer shares 'related' to gold but not actually resulting in the purchase of gold bullion itself do not affect the gold price and are off the gold market. Let's be clear on this, if all these gold related investments were poured into bullion buying of funds or trusts that actually purchased gold against the purchase of its shares or certificates, the gold price would by now be far north of $2,000.
The Change in the Types of Investors
In the early 1970's investors in gold were wealthy individuals, institutions and the central banks. Individual buyers were limited to coins such as the Krugerrand, the Gold Eagle and the like. Over the years until now there has been a dramatic change.
- In the U.S. individuals were permitted to own gold from 1974 on. Record volumes of gold coins were bought in 2010.
- In India the gold market reforms did the same there and the Indian market burgeoned. Last year we believe they imported between 500 and 600 tonnes of gold. Their record was 850 tonnes in one year.
- Central Banks have changed from sellers of gold to either holders or buyers, with the likelihood of them selling again fading into the distance.
- When the gold Exchange Traded Funds were launched, U.S. Fund Managers [Pensions, et al] jumped in to buy more than Switzerland and China hold in their central banks. Currently these funds hold more than 1,600 tonnes all told.
- Physical gold funds popped up in Europe, the Bullion Vault in the U.K. and dealt for the small man. Gold buyers increased in number across the world.
- When China lifted the restraints on individual ownership of gold just over three years ago, the Chinese market exploded quietly in line with the spread of the distribution capabilities of the banks. Now the Chinese government itself [itself, we believe, a buyer of gold for its reserves] has increased the number of banks allowed to import gold. Chinese demand is set this year to overtake India as a gold market. We expect their imports to add to their local production and account together for 550 tonnes of gold bought there. In 2011 we would not be surprised to see this increase to 800 tonnes altogether.
- Even in the developed world jewelry market, the home of low caratage jewelry, demand has recovered in the face of record gold prices to reach previous peak levels. [In the emerging world low carat gold jewelry is generally not deemedreal gold.]
Change in the location of gold buyers.
In the last few years demand has spread from the developed world across through the Middle East to India, eastwards through to China to become a truly global physical gold market centered on the London Gold Fixing.
The drop in the purchase of gold mining shares to the shares of gold Exchange Traded Funds saw the developed world's institutions become indirectly physical gold buyers too. The market has realized that it is the physical gold market that counts. The added joy of this is that the corporate and mining risks do not accompany gold bullion itself.
So today we are looking at a global physical gold market that is growing fast, but at its fastest in China and India where the development of those countries is leading to a rapidly growing middle class that favors gold as an investment, but with a different attitude than found in the developed world.
Julian D. W. Phillips
Gold/Silver Forecaster – Global Watch
SINGAPORE, Feb 21 (Reuters) - Gold rose to a seven-week high on Monday as spreading unrest in the Middle East burnished the metal's appeal as a safe-haven asset, while prices of silver and palladium hit historic highs on expectations of growing industrial demand.
Gold added to a weekly gain of nearly 3 percent last week and was poised for further upside on fresh news from North Africa and the Middle East, where revolutions which deposed the presidents of Tunisia and Egypt have inspired protests across the region, threatening the grip of long-entrenched autocratic leaders.
Spot gold climbed to a seven-week high of $1,396.1, before easing slightly to $1,395.9 per ounce as of 0658 GMT. Gold is poised for a sixth straight session of gains.
U.S. markets are closed on Monday for a holiday.
U.S. gold futures for April delivery climbed 0.7 percent to $1,395.90 per ounce, compared to Friday's settlement at $1,388.60.
" With the unrest in the Middle East and North Africa, dealers couldn't leave for a long weekend with short positions, and this reflects investor sentiment for a flight to safety," said Yuichi Ikemizu, Tokyo branch manager for Standard Bank, adding that gold prices were likely to keep inching higher.
Spot gold may rise to its Jan. 3 high of $1,423.57 per ounce as it has ignored bearish signals and continued to shoot up, says Wang Tao, a Reuters market analyst for commodities and energy technicals.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust , said holdings fell to 1,223.098 tonnes by Feb. 20, its lowest in nine months, from 1,224.008 tonnes on Feb. 15.
Traders said there was slightly higher demand for gold bars in the Middle East, mainly due to the unrest.
SILVER HITS 31-YEAR HIGH
Expectations of growing industrial demand on an improving
world economy and a rally in the overall precious metals market
also helped hoist silver to its highest level since 1980. Spot silver rose to its 31-year high at $33.18 an ounce.
The silver market has become overbought, as the Relative Strength Indicator rose to a three-month high near 77. An RSI reading above 70 indicates an overbought market.
" Cash silver is expensive now compared to the forward market," said a Hong Kong-based trader, " There might be a squeeze going on."
Forward rates on Reuters pages indicated at -0.36, -0.37, -0.37, -0.40 and -0.37 percent for one, two, three, six and 12 months respectively.
A deepening backwardation -- which means futures are cheaper than spot prices -- reflects tightness in the market.
The gold-silver ratio, used to measure how many ounces of silver are needed to buy one ounce of gold, dropped to a 13-year low of 42.18.
Holdings in the world's largest silver-backed exchange-traded fund, iShares Silver Trust , rose to 10,519.05 tonnes by Feb. 18 from 10,438.56 tonnes on Feb. 17.
Platinum gained 0.5 percent to $1,842.25 an ounce while palladium hit a 10-year high of $855.50 in early trade.
Traders said platinum and palladium may see further gains on a solid demand outlook and supply concerns.
I am a big fan of gold and have held my gold since 2006 where it was 600USD per ounce.
Short term, I feel that gold would not outperform most equities but if you buy now and sell in 10 years, you probably would have amassed 200 or 300% of your investment.
WEEKEND DIGEST
Inflation concerns in China, Europe boost gold, silver
Published on: February 19, 2011 at 09:35
(Kitco News) - April Comex gold futures continued their recent uptrend, closing higher for the fifth session in a row Friday. Gold remains in a steady uptrend, amid on-going underlying bullish fundamentals and analysts expected fresh gains next week as well.April gold futures on the Comex division of the New York Mercantile Exchange settled at $1,388.60 up $3.50 on the day. March silver settled at $32.296 an ounce, up 0.726 on the day.
Rising inflation concerns in parts of Europe and China supported both gold and silver Friday. News out of China briefly dampened the gold market early, but prices quickly bounced back. The People's Bank of China raised the reserve requirement ratio for domestic banks by 50 basis points, according to a statement on the central bank's website.
" Gold did very well to come back after the Chinese rate hike, which initially depressed the market," said Jim Steel, senior vice president at metals analyst at HSBC. " It came back on [physical] gold demand from the Far East," he added.
Tom Pawlicki, metals analyst at MF Global minimized the significance of the Chinese news to the gold market. " The global economy is still flush with liquidity with quantitative easing and easy monetary policy in the Euro-zone, which supports gold," he said. Also, he noted that " since 2006 in the previous 10 rate hikes in China in the one month that followed, gold traded higher six out of the 10 times."
Elsewhere, Steel said " The on-going geo-political tensions in the Middle East have helped to revive demand for both gold and silver." Metals traders continue to eye developments in the Middle East following the violent protests in Bahrain.
Meanwhile, March Comex silver futures soared to new " 32-year highs. We are seeing unremitting strong industrial demand coming through" to support silver," HSBC's Steel said. Silver has outperformed gold in recent weeks, as the contract has surged to its highest level since 1980 when the infamous Hunt brothers of Texas attempted to corner the silver market.
Shifting over to the palladium market, news report out of China may have been a supportive factor as spot palladium prices soared to a fresh 10-year high on Friday. China's passenger car sales grew 17.9% in January from a year earlier to 1.15 million units, the International Business Daily reported Friday, citing data from an industry association.
Pawlicki at MF Global pointed to the car sales news as an important market factor for palladium. " China has more gasoline powered vehicles than diesel," he explained. " They are using less platinum in catalytic converters and using more palladium for gasoline powered vehicles."
HSBC's Steel added that palladium also may have garnered spillover strength from silver. " I think it was carried up with the silver."
Shifting over to longer-term demand trends, a new report released by the World Gold Council Friday highlighted global gold demand in 2010 hit a 10-year high in terms of tonnage. " Demand was up 9% year-on-year, and marginally above the previous peak of 2008 despite a 40% increase in the annual average price level between 2008 and 2010. In value terms, total annual gold demand surged 38% to a record of U.S. $150 billion," according to the Gold Council's report.
Also, " investment demand was down 2% compared with 2009, but was the second highest year on record at 1,333 tonnes, which equated to U.S. $52 billion," the Gold Council said. Meanwhile, " the jewelry sector enjoyed a strong recovery in 2010, with annual demand 17% higher than in 2009. Asian consumers drove jewelry demand, particularly in China and India. Chinese demand is expected to continue to increase rapidly during 2011 as economic growth in China remains strong, while Indian gold jewelry demand is likely to remain resilient and grow," the Gold Council said.
Looking ahead to next week, gold traders will be eyeing news out of this weekend's G-20 meeting of finance ministers in France. " If they come up with some sort of agreement on how to tackle the global imbalances it would be negative for gold," said HSBC's Steel.
Also, traders will be monitoring news out of the Bank of England next week. Speculation has been rising that the BOE may need to pull the trigger on a monetary policy rate hike as inflation levels have climbed above the central bank's inflation target zone. If rhetoric in favor of a hike emerges from central bank officials " it would be bearish for gold, as a UK rate hike would diminish the need for gold as an inflation hedge," explained MF Global's Pawlicki.
However, the technical trends remain bullish for gold and silver. Over the near term, HSBC's Steel said: " I am positive. There's no indication the rally has softened yet."
MF Global's Pawlicki agreed. " I think it could still rally next week. The 50-day moving average will offer support at $1,373 [in April gold]. Over the next few weeks it could rally back to the highs at $1,435," he concluded.
By Kitco News
Gold Holds Recent Gains
Commentary: Gold stalled after breaking out yesterday, settling at $1374.43, up $0.63, or 0.05%, on the day. Gold has managed to bounce back from its recent correction despite a steady decline in ETF holdings, as well as a steady increase in interest rate expectations. Buying interest from other segments of the market remains evident, and likely, these market participants are being encouraged by gold’s long-term fundamentals rather than any short-term considerations. Given these circumstances, we would refrain from initiating any medium or longer-term short positions in the metal, opting to sit on the sidelines until a compelling long entry emerges.
Technical Outlook: Prices put in a Doji candlestick below resistance at $1379.81, the 61.8% Fibonacci retracement level, hinting the corrective upswing recorded from late January may have reached its apex. Renewed bearish momentum from here initially targets the 50% Fib at $1366.15.
17 February 2011 06:51 GMT
19 February 2011 07:50 GMT
Gold to Resume Advance Amid Debt Concerns, Middle East Tensions
Fundamental Forecast for Gold: Bullish
Gold extended its two week advance and now looks poised to push higher as global debt and inflation concerns continue to rattle the markets. At the same time, unrest in the Middle East is fueling demand in the yellow metal. As recent developments point to further gains in the bullion, traders should not rule out a move back towards the record high of $1432.5/oz.
This past week, it seemed as if gold overtook $1380 with ease as tensions in the Middle East deepened, while global inflationary pressures continue to make policy difficult in major economies. With regards to the former, following protests in Egypt, Iranian state TV said that warships were en route to the Suez Canal due to growing unrest in Bahrain Yemen. As of late, reports have shown that at least five people have been killed since the protests in Yemen which began on February 14th against Bahrain’s ruling Al Khalifa family. The troubles do not stop there protests have now emerged in Algeria and Iran. Therefore, as tensions in the Middle East continue to gather pace, gold could witness further buying pressure as trader’s hedge against the declines in the other assets.
The advance in the bullion is also attributed to sovereign debt concerns in the 17 member euro area. As of late, the yield on Portuguese, Spanish, and Irish 10 year notes are up 3bp, 1bp, and 4bp respectively. In particular, the yield on Portugal’s 10 year notes stands at 7.239 percent, which marks the 10thconsecutive session that the yield has held above 7 percent. As the troubled economy runs out of options, leaders are pushing EU leaders to adopt a new crisis measurement at its summit next month. Failure to meet market expectations will not only send the euro into a free fall, but will also lead gold to push higher.
Going forward, debt concerns in the Euro-Zone and tensions in the Middle East will likely remain in the spotlight and will continue to spur interest in gold next week as solutions are unlikely to arrive by the end of February. Taking a look at price action, technical developments in gold are painting a bullish picture for the yellow metal. The MACD has yet to reverse course after signaling for gains February 1st, while intraday charts remain supported by a rising trend line. So long as the bullish trends remain intact, upside risks remain.
///DailyFX
2011 outlook: The World Gold Council Director of Investment, Marcus Grubb, sees central bank demand and inflation hedging supporting the gold price in 2011 View the video