Saturday, 21 May 2011
Gold prices rose as China's invest in gold surged 179%.
The gold price climbed $19.30 Friday surging through $1,5011.50 per ounce.
Albanian_Minerals President in New York Sahit_Muja said "Strength in the gold prices is expected to increase as demand from China is expected to doubled in 2011".
Gold prices rose despite strength in the U.S. dollar versus the euro and pound.
Concerns that Greece was on the verge of restructuring its debt weighed on the euro and helped drive investment demand into gold and other precious metals.
Shares rose for gold mining producers and explorers followed the surging gold price higher.
Investors has increase the gold purchasing in India to protect the assets from devaluation.
India's annual rate of inflation, based to 8.66 per cent for April 2011 .
Global gold demand in the first quarter of 2011 totaled 981.3 tonnes, up 11% year-on-year from 881.0 tonnes in the first quarter of 2010.
In the dollar value this translated to U.S. $43.7 billion in 2011, compared with $31.4 billion in the first quarter of 2010
China has surpassed India as the world´s top gold market this year.
Chinese investors more than doubled their purchases of gold during the first quarter in 2011, compared to the same period last year.
China has invested $4.1 billion into gold bars and coins during this first quarter of 2011.
China´s investment demand increased to 90.0 metric tonnes (40.7 tonnes in the year prior), compared to India´s 85.6 tonnes.
The first quarter, investments into bullion surged 179% in China totalling $4.1 billion.
Source: http://online.wsj.com/community/groups/oil-921/topics/gold-prices-rose-chinas-invest
Gold Imports by China May Increase After Investment Demand Overtakes India
China produced 340 metric tons of gold last year and consumption was about 700 tons, leaving a gap of 350 tons to 360 tons, Albert Cheng, Far East managing director at the council, said yesterday. “With increasing demand in China we will have to rely on imports to fill the gap between demand and supply.” China is the world’s largest gold producer and second-largest in overall consumption.
China’s investment demand jumped 123 percent to 90.9 tons in the first three months, compared with an 8 percent rise to 85.6 tons for India, the council said. Bullion jumped to a record $1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.
“Gold has taken on a new role in China amid concern about inflation,” Song Qing, a director at Lion Fund Management Co., said by phone from Shanghai. “It is increasingly being seen as an asset allocation choice. Just imagine the total wealth in China and even a small percentage of that choosing to buy gold. This demand is going to be enormous.”
China imported more than 300 tons last year, People’s Bank of China Vice Governor Yi Gang said on Feb. 26 in Beijing. The government does not publish official statistics on gold imports.
The country’s total gold demand in the first quarter jumped 47 percent from a year ago to 233.8 tons, the council said. That still lags behind Indian consumption of 291.8 tons, according to the council.
Inflation Fear
China’s consumer prices rose 5.3 percent in April from a year earlier, exceeding the government’s 2011 target of 4 percent for the fourth month. The People’s Bank of China has since mid-October raised interest rates four times and boosted banks’ reserve requirement ratio eight times to a record 21 percent to rein in lending and prevent inflows of capital from overseas flooding the financial system.
“The headline number is above 5 percent, yet some Chinese consumers feel much higher inflation in their day-to-day life,” Lion Fund’s Song said. “Inflation, coupled with concern about uncertainties in the global recovery, is fueling demand.”
The culture’s deep-rooted preference for the precious metal, the impending inflationary fears in emerging markets, and limited domestic investment channels will all drive further growth in the Chinese gold demand, the council said in a report. Demand for gold jewelry gained 21 percent in the first quarter from a year ago to a record 142.9 tons.
Investment Demand
Investment demand has grown by an average 14 percent a year since deregulation of the market in 2001, “a trend that has continued with the strong growth momentum witnessed in the first quarter,” it said.
Jewelry demand has more than doubled in the last seven years to 451.8 tons in 2010, from 224.1 tons in 2004. India and China combined to contribute 63 percent of the total gold jewelry demand in the world in the first quarter, it said.
The metal increased 5.8 percent this year after a 30 percent rally in 2010, keeping it on course for an 11th straight annual advance. Immediate-delivery bullion gained 0.6 percent to $1,502.75 an ounce at 5:13 p.m. in Shanghai.
Shanghai Planning Gold Exchange-Traded Funds to Tap Rising Demand in China
“There are some complexities, as the central bank is in charge of gold management, while we still need to go through the procedures for launching new exchange products,” Wang Zhe, chairman of the bourse, said at a Shanghai forum. There is no timetable and the exchange is working with regulators on the plan, Wang said. China is the world’s largest gold producer and second-largest in overall consumption.
Gold investment demand by China more than doubled in the first quarter, overtaking India to become the largest market for gold coins and bars, the World Gold Council said May 19. Bullion jumped to a record $1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.
China doesn’t have gold ETFs and investors usually choose to buy physical gold, or invest through contracts traded on the Shanghai Gold Exchange, the Shanghai Futures Exchange or through banks. Lion Fund Management Co. in January said it raised more than 3.2 billion yuan ($483 million) for China’s first gold fund to be invested in overseas exchange-traded products.
Demand Jumps
Investment demand in China jumped 123 percent to 90.9 metric tons in the first three months. Total consumption including jewelry gained 47 percent from a year ago to 233.8 tons, the council said. That still lags behind India’s 291.8 tons. China demand may double before 2020, the council said.
Global investment increased 26 percent to 310.5 tons in the quarter. While bar and coin purchases climbed 52 percent to 366.4 tons, holdings in exchange-traded products backed by the metal declined. ETP assets dropped 69.9 tons from December through March, according to data compiled by Bloomberg, after reaching a record 2,114.6 tons.
Billionaire investor George Soros sold 99 percent of his bullion-backed SPDR Gold Trust assets and all 5 million shares in the iShares Gold Trust in the first quarter, a government filing showed this week. John Paulson, the biggest investor in the SPDR Gold Trust, maintained his positions.
Tuesday, 17 May 2011
Gold Likely to Test $1,460 an Ounce Support Level
Standing in front of the Basilica Di San Marco in Venice on Monday morning the permanent lure of gold is clear with the gilding on the portals sparkling through the early morning shadow. Gold endures, but that is not to say the upward trend in gold will continue at the same pace as seen in recent weeks.
![GUPPY%20MAY%2017%20DONE[1]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBdiRbgQ9PX3v0Su0tQKa82-5-cK3liiddeMYGYs5VBsP9M8JDgpsM_wd4YdhR10-4MLFYAHnQn6pLx_EsnJKfpNGW5k0vmfT6aGCeN1mnlctiNOXtV5-RzGI91cnCJosRW0TCf1AnHZ4/s1600-h/GUPPY%20MAY%2017%20DONE%5B1%5D%5B5%5D.jpg "GUPPY%20MAY%2017%20DONE[1]")
Professional traders recognize a game changer when they see one. Japanese housewives, reputedly very active retail gold traders, are a little slower to recognize the rules of the game has changed. These two forces have been playing out in the gold market in the last 10 days. These are shorter-term influences.
The game changer changes the way we trade and perhaps the enthusiasm with which we can trade but it does not affect the longer-term secular trend in gold.
The game changer is the willingness of the futures exchanges to rapidly lift margin conditions and ‘squeeze’ the market. The fear amongst the more experienced professionals is that these margin changes will apply to gold and other commodities so they are rationalizing open positions. This has influenced the intense sell off that developed and it capped the rebound in the last week.
The rebound from $1,480/ounce to $1,520/ounce was created by the retail trader – the Japanese housewives. They were slow to recognize the way margin changes in silver had changed the ground rules for commodity trading. They bought on the dip, which is a classic trading strategy. The rally they created provided the opportunity for more experienced traders to sell into and capture the last profits from their open long positions. This selling drove the rally down to test support near $1,480/ounce again.
The key story with gold is the location of support. This will provide the base for a continuation of the uptrend, although the rate of the uptrend will be much slower as traders are required to carry larger margins. Support is provided by two features.
The first feature is the position of the long-term group of GMMA averages. These help locate the support price favored by long-term investors. This is where they will enter the market in larger numbers, probing a floor for the retreat and the rebound. Failure to hold at these levels puts the longer-term historical support levels into play.
The lower edge of the GMMA is located neat $1,460/ounce. This represents a short-term support area for the re-test of minor support near $1,480/ounce. This is the upper edge of the long term GMMA.
The historical support is provided in the support band between $1,420/ounce and $1,440/ounce. This is the upper edge of the long-term sideways trading band that dominated the gold price from November 2010 to April 2011.
There is a high probability gold will test the $1,460/ounce support level before developing a slower uptrend rebound. If margin changes continue to flow through the system, then the lower targets between $1,420/ounce and $1,440/ounce are the valid support level.
It is important to understand that this is a market now driven by fear of regulatory change and this has replaced the speculative fervor that prevailed in previous months. A move above $1,520/ounce signals a continuation of the uptrend.
(Source: http://www.cnbc.com/id/43056128)
Gold Daily Fundamental Analysis for May 18, 2011
The metal was pressured the most by the flow of the latest 13-F filings –which is a quarterly reporting form of security holdings filed by institutional investment managers to the SEC- that showed investors cutback heavily on their precious metal holdings in the first quarter as did George Soros that dumped his gold holdings in the quarter.
With the confirmation of big investors and hedge funds dampening the metal in the first quarter despite the rally to new all-time records, the metals were pressured to the downside under more profit taking and extended downside correction.
Investors are now weighing the move for metals and the recent rally as bulls shy away from the metals and still see high uncertainty this period with the correction still not coming to an end.
We expect gold to be still pressured by the 13-F filings on Wednesday, yet more dominantly we see that the developments in the European debt crisis that remains a heavy weight on the market with the possibility of Greek debt rescheduling and the FOMC minutes.
On Wednesday the FOMC minutes that will confirm the low Feds rates for an extended period of time, which will be some support for gold to attempt to cutback on the losses as far as the dollar returns south with the reminder from the minutes since in generally their impact on the market will not be very heavy as Bernanke already provided the latest updates on the outlook for the monetary policy after the decision.
Gold Declines to One-Week Low as U.S. Housing Data Damps Commodity Outlook
Housing starts declined unexpectedly in April, and any recovery in construction may take years because unemployment is lingering around 9 percent and wages are stagnant. The Thomson Reuters/Jefferies CRB Index of 19 raw materials dropped for the third straight session.
“Precious metals may have difficulty advancing due to ongoing liquidation of commodity trades,” said Tom Pawlicki, an analyst at MF Global Holding Ltd. in Chicago. “Slowing economic growth has created pressure in stocks and energies and pressured metals from the deflation angle.”
Gold futures for June delivery fell $10.60, or 0.7 percent, to settle at $1,480 an ounce at 2 p.m. on the Comex in New York. Earlier, the price touched $1,471.10, the lowest for a most- active contract since May 6. The metal is down 6.2 percent from a record $1,577.40 on May 2.
Soros Fund Management LLC, founded by billionaire George Soros, sold 99 percent of its holding in the bullion-backed SPDR Gold Trust during the first quarter, according to a government filing yesterday. The fund also shed all 5 million shares in the iShares Gold Trust and cut stakes in NovaGold Resources Inc. and Kinross Gold Corp., the filing showed.
“It will be clear to own gold” when spot prices touch $1,425, said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter.
Luring Investment
Gold has rallied for more than a decade, attracting investors including Soros and hedge-fund founder John Paulson. Paulson & Co. maintained 31.5 million shares in the SPDR Gold Trust during the first quarter, and boosted holdings of mining companies including Barrick Gold Corp. and Gold Fields Ltd., according to the fund’s filing with the U.S. Securities and Exchange Commission.
Silver futures for July delivery declined 64.1 cents, or 1.9 percent, to $33.491 an ounce on the Comex. The price has tumbled 33 percent from a 31-year high of $49.845 on April 25.
Palladium futures for June delivery rose 75 cents to $714.25 an ounce on the New York Mercantile Exchange. Platinum futures for July delivery gained $1 to $1,761 an ounce.
Gold Technical Analysis for May 17, 2011
Gold market continued their weak look on Monday, as the markets rose, only to be rejected yet again. However, as we are currently sitting on top of a large uptrend trend line, it is difficult to sell this contract at the moment. Gold is certainly in an uptrend over the last 10 years or so – now we are just trying to figure out if this is a small pullback, or a larger correction. As long as we are above the trend line, we will only buy – but only on signs of strength.
(Source: http://www.commoditiesmansion.com/technical-analysis/gold-technical-analysis-for-may-17-2011/)
Gold Price Drops, QE3 Debate Intensifies
On Monday, the gold price dipped $5.95 to $1,489.26 as the price of gold struggled to hold above $1,500 per ounce. The SPDR Gold Trust (GLD), the most liquid gold price proxy in the equity markets, settled lower by $0.26 at $145.37 per share. With the drop in the gold price, the yellow metal is now 5.5% below its $1,577.40 all-time record high, reached on May 2.
A key catalyst for the recent weakness in the gold price has been the expiration of the Fed’s second round of quantitative easing, QE2, which is set to occur on June 30. With the debate intensifying of late amongst investors and economists over the likelihood of yet another round of quantitative easing, uncertainty surrounding the outlook for the gold price has risen in kind.
Jeff Currie, commodity analyst at Goldman Sachs, made a bearish call on the gold price at an industry conference. “Gold should directly reflect what has happened with QE,” Currie noted, “and we should see a substantial pullback.” While he did not provide a longer-term forecast on the price of gold, his colleague at Goldman, chief U.S. economist Jan Hatzius, recently remained steadfast that the Fed will not engage in QE3 in 2011.
The cautious near-term comments from Goldman Sachs are consistent with those of John Burbank, founder and chief investment officer of $4.6 billion hedge fund Passport Capital. Last week, Burbank predicted that the gold price will experience a short-term correction that could last through the summer.
However, Burbank conversely reiterated his long-term bullish outlook on the gold price. “The biggest reason to stay in gold is because central banks around the world can see the writing on the wall long term,” Burbank asserted, “which is that the dollar will be devalued one way or another and that Congress has no appetite for hard decisions which would be deflationary in nature.
Russell Russell, founder of Dow Theory Letters, the world’s longest-running daily investment letter, also addressed the likelihood of QE3 and the potential impact on the gold price. “The obvious next question is, what happens after June 30 when the Fed ends QE2? Will the stock market and the economy slump when the Fed halts its printing operation?”
“My guess is that the Fed will gear its operations to the market; if the market sinks the Fed will continue printing (probably printing under another name, and it won’t be quantitative easing),” Russell contended. “But after June 30 if the markets are holding together the Fed will take a rest, and Bernanke will announce to the world that ‘The Fed has saved the US and the world again.’”
While Russell – one of the foremost gold price bulls over the past decade – appeared uncertain over the possibility of QE3 in 2011, he appeared much more confident that the Fed will continue to provide significant levels of monetary stimulus leading up to the 2012 Presidential election. “For this reason, I expect an all-out effort by the government to tell us that ‘the times are good and getting better.’ Political pressure will bear down on the Fed to do all it can to jazz up the economy.” Based on the historical relationship between the gold price and quantitative easing, the price of gold would likely remain well supported in such a scenario.
(Source: http://www.goldalert.com/gold-price-drops-qe3-debate-intensifies/)
Gold price pressured by George Soros' fund slashing holdings of the precious metal
Gold for May delivery settled down $US10.60, or 0.7 per cent, at $US1479.80 a troy ounce on the Comex division of the New York Mercantile Exchange. The most actively traded gold contract, for June delivery, ended down $US10.60, or 0.7 per cent, at $US1480.00 a troy ounce.
Soros Fund Management disclosed yesterday in a securities filing that it sold 99 per cent of its stake, or 4.7 million shares, in exchange-traded fund SPDR Gold Trust in the first quarter.
The shares sold were worth $US680 million ($641m) based on yesterday’s prices. However, gold prices averaged slightly less in the first quarter, so Soros's take could have been smaller.
As of March 31, Soros held just 49,400 shares valued at $US6.9m of the fund, which is backed by physical gold.
The news sapped confidence among gold investors because Mr Soros had led the charge on gold over the past two years, aggressively purchasing the precious metal even after calling it "the ultimate asset bubble".
"I assume he was sitting on a gigantic mountain of profit in that position and the prudent thing to do would've been to book some of it," said Matt Zeman, head of trading at Kingsview Financial. "Because he's leaving, you're going to see a lot of small speculators jumping ship."
Another closely watched hedge fund, Eton Park Capital Management, cut its SPDR Gold Trust stake in half by selling nearly 2.2 million shares to keep just 2.3 million shares, as of March 31. Eton Park, run by former Goldman Sachs trader Eric Mindich, had first disclosed the gold position in the second quarter of last year, buying 6.6 million shares.
The sales have pressured SPDR Gold Trust's gold holdings lower during the first quarter, with ounces in trust down 5.4 per cent in the period. While redemptions have accelerated in the recent months, the ETF's gold holdings began to trickle out after peaking in late June of last year. At the time, gold prices had hit $US1200 an ounce for the first time and some investors first moved to cash in gains.
"Psychologically, this probably takes a bit of a toll, even though we kind of knew this already," said Bill O'Neill, a principal with LOGIC Advisors.
However, not all marquee-name hedge funds are cutting back on gold.
John Paulson's fund Paulson & Co, one of the world's largest hedge funds and the largest investor in GLD with almost 8 per cent of shares outstanding, has kept its stake unchanged at 31.5 million shares. Paulson had garnered fame throughout the financial crisis by making large bets against sub-prime mortgages.
Mr Paulson had told investors two weeks ago that gold prices could reach $US4000 an ounce over the next three to five years due to loose monetary policy in the US and Britain, the Wall Street Journal reported.
Analysts at Standard Bank today reiterated the view that gold is worth buying at prices below $US1500, noting that the $US1480 level represents a strong support.
Investors are still seeking out gold to hedge against both inflation and turmoil in other markets. Physically backed gold ETFs saw net inflows of 123.1 tonnes in the week ended May 13.
The weakness in gold spilled over into silver futures, with July-delivery silver ending down US64.1c, or 1.9 per cent, at $US33.491 a troy ounce. May-delivery silver was down US64.1c, or 1.9 per cent, at $US33.488 a troy ounce.
Silver remains vulnerable to sharp declines. Investors are jittery after the correction earlier this month, which knocked 27 per cent off the metal's value, sending prices off 31-year highs.
Mr Zeman said the "bleeding" in silver is likely to stop once the metal falls closer to $US30.
Precious metals prices remained subdued even as the US dollar reversed course. The ICE Dollar Index was recently at 75.585, down from 75.612 late in the previous New York session.
Investors holding foreign currencies favour US dollar-denominated gold and silver futures when the US dollar weakens, as the contracts seem cheaper.
Gold Futures Slip to $1,480, Dollar Firm
![gold-fever[1]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUIbp7WZYwKKh5rbbc00xw7kfPoaL0NlB9wARZNcXV6LgkxdMfEc9ncmefKmHni8zPeCq2tBQrCfyZzYLLaMsqI8EN6JHWhGid2TIIwyeVxF0uv6W97vc9XeKyz5i9lzNxs1_yTws6d2c/s1600-h/gold-fever%5B1%5D%5B6%5D.jpg "gold-fever[1]")
COMEX gold futures tumbled from over $1,490 to an intra-day low of $1,471.10 in mid-day trading, but pared their losses this afternoon.
Gold and the broader commodities complex came under selling pressure as the U.S. dollar held firm against a basket of foreign currencies. In afternoon trading, the U.S. Dollar Index (DXY) hugged the flatline near 75.60.
(Source: http://www.goldalert.com/2011/05/gold-futures-slip-to-1480-dollar-firm/)
Gold Falls as Big Investors Shuffle Stakes
Gold for June delivery lost $10.60 to settle at $1,480 at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,497.50 and as low as $1,471.70. The spot gold price was falling $7.30, according to Kitco's gold index.
Silver prices shed 64 cents to close at $33.49 an ounce. The U.S. dollar index reversed directions and was losing 0.16% to $75.47.
Both silver and gold faced some noise Tuesday as investors digest the latest 13F filings for the first quarter, which don't look good for gold.
George Soros dumped his gold holdings in the first quarter but he did put some money on two large cap miners, Barrick Gold(ABX_) and Goldcorp(GG_).
Soros' closely watched fund added a handful of shares to the two names, raising its position in Barrick to 8,500 and initiating a new position in Goldcorp of 7,600 shares. Soros reduced his holdings in the SPDR Gold Trust(GLD_) to 49,400 and reduced his big share ofNovaGold(NG_) to 3.5 million shares from 12.91 million. Soros' bet on the small gold miner was a big boost for shares in 2010 which have fallen 35.8% year-to-date.
Soros did initiate a new position in Freeport McMoRan Copper & Gold(FCX_) of 301,300 shares and added to his position of Great Basin Gold(GBG_) bringing his stake to 6 million shares.
John Paulson, who made his name betting against the mortgage market before it imploded, kept his 31 million share stake of the GLD and added 97,540 shares of AngloGold Ashanti(AU). Paulson sold some of his stake in Kinross Gold(KGC), but kept his stake in NovaGold the same.
Paulson added 2 million shares of Gold Fields(GFI), 205,000 of Rangold (GOLD) and added to his Barrick position with another 500,000 shares.
Although the headlines all zeroed in on Soros selling gold and Eton Park selling 2.2 million SPDR Gold Trust shares, some investment banks built up positions, including JPMorgan Chase(JPM) with 2.4 million shares.
In the cheaper but smaller gold ETF iShares Gold Trust(IAU), Soros closed out his position andFranklin Resources dumped more than 16 million shares, but a large portion of the selling was supported by Blackrock Advisors, which initiated a new position of 14.4 million and is incidentally the trust's sponsor.
Silver, on the other hand, was not subject to the same kind of selling. The iShares Silver Trust(SLV) saw huge bets by Bank of America and JPMorgan, which increased their shares by a combined 10.56 million to be the number one and three holder, respectively. One of the biggest sellers was Citigroup(C) with 1.5 million shares.
The filings are from January 2011 through March and it will be interesting to see if the heavy selling that silver saw in April and May was in part due to these firms dumping those same silver positions. The ETF has shed 656 tons since April 1st.
The biggest fear among some analysts was that the hot money in ETFs that helped gold and silver rally to record highs would also lead to their downfalls. Some experts predicted that gold should be at $800-$1,000 once the speculative money came out.
The first quarter proved that a lot of the speculative money did come out and gold prices are still holding around $1,500, which begs the question: is gold really resilient? Or is there more of a selloff to come?
Gold and silver were suffering more of a selloff Tuesday as the euro and dollar stayed volatile after Greece hinted it would be open to some kind of debt restructuring. U.K. inflation for April also wasn't helping the metals as it came in hotter than expected at 4.5%. The gold price was down 0.91% in Pound denomination as the higher reading was sparking more aggressive calls for a rate hike, which the Bank of England has been fighting against favoring anemic growth over higher prices. The IMF estimates that the U.K.'s economy will grow 1.7% in 2011 and rates are currency at 0.5%.
"Seasonally strong physical demand and pockets of investment bargain hunting will continue to provide support to gold and also silver in the coming sessions," says James Moore, research analyst at FastMarkets. "However the recent ETF redemptions and exit of large-scale investors ... could provide overhead resistance."
If any rallies are seen as profit taking opportunities then gold and silver will be in for a choppy ride. Phil Streible, senior market strategist at Lind-Waldock, says he likes gold right now and thinks that gold's trend is up, "it looks very solid."
On any big weakness, Streible has been looking to buy silver "that didn't work so well a few weeks ago, but I think that that correction is done with." Streible says when he sees silver down $1-$1.50 in a day that that is a time to get interested.
Gold mining stocks were mostly higher Tuesday.Kinross Gold(KGC) was up 1.75% at $45.17 whileYamana Gold(AUY) was down 0.24% to $52.94. Other gold stocks, Agnico-Eagle(AEM) and Eldorado Gold(EGO) were trading at $62.09 and $15.14, respectively.
(Source: http://www.thestreet.com/story/11121735/3/gold-silver-prices-fall-as-big-investors-dump-gold.html)
Soros Sells Most of Gold ETP Holdings During First Quarter
Soros Fund Management LLC held 49,400 shares of SPDR Gold Trust as of March 31, compared with 4.721 million at the end of the fourth quarter, the filing today with the U.S. Securities and Exchange Commission showed. The New York-based fund sold all 5 million shares it held in iShares Gold Trust. Soros bought 301,300 shares of Freeport-McMoRan and 7,600 shares of Goldcorp.
The decade-long surge in gold attracted investors seeking better returns than equities or bonds and an alternative to currencies, helping boost holdings in exchange-traded products backed by bullion to a record in December. Accelerating inflation, Europe’s debt crisis, a weakening dollar and fighting in Libya boosted the spot price of the metal to an all-time high of $1,577.57 an ounce on May 2. ETP holdings have slipped 3.6 percent from the peak.
“While backward looking, it is the best available indicator of investors’ precious-metals exposure,” Edel Tully, an analyst at UBS AG in London, said on May 9.
Michael Vachon, a spokesman for Soros, declined to comment on the sale. Soros Fund Management manages about $28 billion.
Investors in 10 gold-backed exchange-traded products owned 2,041 metric tons of metal as of May 13 valued at $98 billion with gold at $1,493.60, according to Bloomberg calculations. Gold futures settled today at $1,490.60 in New York.
‘Asset Bubble’
Soros described gold in January last year as “the ultimate asset bubble.” In a Nov. 15 speech, the 80-year-old investor said that conditions for the metal to keep rising were “pretty ideal,” and in January this year, he said the boom in commodities may last “a couple of years” longer.
“As the precious metals rally ends, you’ll get transition toward related equities,” said James Dailey, who manages about $200 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. “You don’t see any speculative appetite for gold stocks yet.”
The Philadelphia Stock Exchange Gold and Silver Index has dropped 14 percent this year. Gold futures have climbed 4.9 percent.
Investor demand for precious metals accelerated after the collapse of Lehman Brothers Holdings Inc. in September 2008 and as governments and central banks pumped trillions of dollars into the world financial system.
Fed Policy
The Federal Reserve has held interest rates close to zero percent since December 2008. Chairman Ben S. Bernanke has said he’s in no hurry to raise borrowing costs and that he will keep reinvesting proceeds of maturing debt held by the central bank in bonds.
The European Central Bank last month raised rates for the first time in almost three years to cool accelerating consumer prices. President Jean-Claude Trichet said May 9 that the world’s central bankers are united in fighting inflation. Some investors buy bullion as an inflation hedge, while higher interest rates increase the opportunity cost of holding the non- interest-bearing metal.
Paulson & Co., the U.S. hedge fund run by John Paulson, maintained 31.55 million shares in the SPDR Gold Trust, a filing showed today.
‘Switched Exposure’
In the first quarter, gold ETP holdings declined 3.3 percent, the first decline in a year. Silver holdings rose 1.9 percent, palladium assets fell 1 percent, and platinum holdings gained 12 percent.
“Some of the ETF liquidation in the quarter was not actually outright gold selling,” UBS’s Tully said. “In some cases, investors switched their gold exposure from ETP-based to allocated, and so this somewhat distorts the ETP ownership picture.”
Eric Mindich’s Eton Park Capital Management LP reduced its stake in the SPDR Gold Trust by 48 percent during the first quarter, according to a government filing. Eton sold 2.165 million shares, cutting its holdings to 2.328 million, according to an SEC filing.
Touradji Capital Management LP, founded by Paul Touradji, sold all of its assets in the SPDR Gold Trust in the first quarter. The fund had 173,000 shares at the end of the fourth quarter. Touradji also reduced its holdings of Barrick Gold Corp. (ABX), the world’s largest producer.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
ETPs trade on exchanges with each share representing metal held in a vault.
Saturday, 14 May 2011
India: Gold falls to Rs 22, 230 on weak demand
New Delhi: Gold and silver fell on Saturday due to a weakening global trend and slackened spot demand. While gold declined by by Rs 240 to Rs 22,230 per 10 grams, silver took a plunge of Rs 540 to Rs 54,410 per kg.
Trading sentiments turned bearish as gold in global markets showed weakness due to a stronger dollar eroding appeal of the precious metal as an alternative asset.
Gold in global markets, which normally sets a price trend on the domestic front, fell by USD 11.70 to USD 1,495.20 an ounce.
In addition, lack of demand at spot markets despite the ongoing marriage season, also kept pressure on the prices, traders said.
On the domestic front, gold of 99.9 and 99.5 per cent purity fell by Rs 240 each to Rs 22,230 and Rs 22,120 per 10 grams, respectively. It rose by Rs 300 in yesterday's trade.
Sovereigns followed suit and declined by Rs 100 to Rs 18,400 per piece of eight grams.
In line with a general trend, silver ready dropped by Rs 540 to Rs 54,410 per kg. The metal had gained Rs 1,650 in last trading session. Silver-weekly-based delivery lost Rs 440 to Rs 53,810 per kg, after gaining Rs 1,950 in the previous session.
Silver coins also tumbled by Rs 1,000 to Rs 60,000 for buying and Rs 61,000 for selling of 100 pieces.
(Source: http://www.financialexpress.com/news/gold-falls-to-rs-22-230-on-weak-demand/790810/0)
Wednesday, 4 May 2011
Gold Price Rebounds After 3% Drop
GOLD PRICE NEWS – After sliding as low as $1,531 per ounce overnight, the gold price rebounded Wednesday morning back to $1,541. Gold price volatility has picked up in recent sessions with the yellow metal falling $46, or 3%, off its all-time high of $1,577.50 posted earlier this week. Silver has been even more volatile, plunging from a high of $49.79 per ounce to a low last night of $40.33 – a stunning 19% drop in a mere 48 hours.
On Tuesday, the gold price retreated $7.06 to $1,538.56 per ounce amid a widespread sell-off in the commodities complex. The price of gold reached an intra-day low near $1,527, before paring its losses in afternoon trading. The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, settled lower by $0.53 at $149.88 per share. Silver once again moved much more violently than the gold price, plunging $2.25, or 5.1%, to $41.74 per ounce. The price of silver fell from over $45 to an intra-day low of $40.60 on Tuesday, before rebounding modestly.
Precious metals have declined despite the fact that the U.S. dollar has remained weak. The decline can be attributed to profit-taking and massive liquidation of gold and silver futures on the COMEX from momentum players, who fled as prices broke down. Three hikes in margin requirements in one week by the CME group added to the selling pressure.
The sell-off in silver and gold prices can also be attributed to the recent overbought condition and excessive bullish sentiment prevalent in these markets. Market Vane’s bullish consensus on silver reached 97% last week.
Others pointed to the prospects of tighter monetary policy across the globe another catalyst for the decline. On Tuesday, the Reserve Bank of India (RBI) became the latest central bank to raise interest rates. Many expect the ECB to follow suit this Thursday. In the U.S., Kansas City Fed President Thomas Hoenig – who is no longer an FOMC voting member – stated at a banking conference in Washington, D.C. that the Federal Reserve needs to “slowly reverse” monetary policy to “calm inflation fears.”
Noted business historian and Harvard University professor, Niall Ferguson, echoed Hoenig’s views on inflation when he argued in Newsweekthat the Fed continues to monitor the wrong inflationary measures. “The reason the CPI is losing credibility is that…it’s a bogus index,”Ferguson wrote, “The way inflation is calculated by the Bureau of Labor Statistics has been ‘improved’ 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back.”
Dr. Martin Murenbeeld of DundeeWealth Economics, a long-time bull on the gold price, offered a contrasting view to Ferguson in his latestGold Monitor. Murenbeeld contended that the Fed “dare not do other than foster economic growth as best it can” by ensuring the monetary spigots remain open. The fact that the gold price and other commodities rise as a result is an unfortunate consequence, from the Fed’s perspective, but one that is secondary to economic growth.
Murenbeeld subsequently discussed his ongoing concerns with the European sovereign debt crisis, which has recently taken a backseat to news involving Osama bin Laden’s death, the Fed, Libya, Japan, and several other items. “The crisis in the Eurozone is fundamentally a Eurozone banking crisis (banks are full of government paper),” he continued, “and any disasters will have to be met with the ECB printing press.” The gold price would likely respond positive to such a development, according to Murenbeeld.
David Einhorn, President of $8 billion hedge fund Greenlight Capital and another long-time bull on the gold price, offered his own perspective on the Fed’s latest policies, particularly QE2. In his firm’s most recent investor letter, Einhorn wrote that “It appears that in response to quantitative easing, investors now fear inflation…The money that the private sector would have lent to the government, had the Federal Reserve not printed the money instead, has gone to other goods, notably commodities and stocks to the extent investors see them as a better inflation hedge than bonds.”
Einhorn went on to say that investments tied to the gold price comprise one of Greenlight’s four largest positions, which the firm is using as one of its primary inflation hedges. Given Einhorn’s positive outlook on the gold price, it appears that he too sees the Fed maintaining its dovish outlook for the foreseeable future.
(Source: http://www.goldalert.com/gold-price-rebounds-after-3-drop/)
Gold, Silver Prices Search for Support
NEW YORK (TheStreet ) -- Gold and silver prices were trying to recover after a painful selloff Tuesday in after-hours trading.
Gold for June delivery was losing $4.30 to $1,536.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has stayed in a tight range between $1,539.20 and $1,531.20 Wednesday. The spot gold price was down 90 cents, according to Kitco's gold index.
Silver prices were down $1.20 to $41.38 with the $40 support level still holding despite the metal's previous 7.5% one-day drop. The U.S. dollar index was losing 0.15% to $73.01 heading towards its lowest level of $71.459 reached in March 2008.
A weaker U.S. dollar and news of an official $116 billion bailout of Portugal weren't enough to buoy gold and silver but they may have stopped the bleeding.
Silver has tanked 18% from its high last week of $49.82 led in part by oversold conditions and three margin hikes by the CME as the futures market tried to handle the volatility.
"The reason why the exchanges and clearing houses are raising their rates is because of these violent moves we have been having in silver, anywhere from 5-10% moves on a daily overnight basis," says Anthony Neglia, president of Tower Trading, who says the hikes are not affecting his silver positions.
Neglia likes silver above $42 and still believes with metal will hit $50, but that below $40 he would get bearish. He said, "$38 is your next level because that is where this whole move started from."
Gold, on the other hand, is a deeper and more liquid market, which makes it able to absorb volatility better. Mihir Dange, trader at Arbitrage, thinks that margin hikes won't hit the gold market.
Gold's range is big and high between $1,500 and $1,577 an ounce. Dange is still bullish on the metal thinking it can hit $1,600 in 2011.
"If you're playing the macro picture, you can buy dips and hold," he said. Dange is selling into strength to book profits.
Dange says if gold holds steady below $1,520 then it could sink to $1,500 and around $1,515-ish he would be a long-term buyer. If gold breaches $1,477 an ounce, Dange says he would get short.
There are two events this week which will provide direction for the precious metals: the European Central Bank meeting Thursday and Friday's U.S. jobs number. The ECB raised rates at its last meeting in April by 25 basis points and it is unlikely that it will do so again at the next meeting. Some experts are looking at July for the next hike.
Neglia, however, seems pretty convinced the ECB will raise rates to fight inflation that is now at 2.7%. He thinks traders are looking to "flatten out" their silver positions ahead of the move, which could have contributed to silver's recent dramatic selloff.
Dange thinks that Friday's jobs number will be more significant for the gold price arguing that even if the ECB raises rates the Federal Reserve has made it clear it won't until at least the fall.
The U.S. unemployment rate is expected to rise to 8.9%, according to Briefing.com, while the private sector is expected to add 200,000 jobs. The number of people filing for unemployment benefits for the first time has been rising in recent weeks over the pivotal 400,000 level which could put a crimp in a better jobs picture. Initial claims are a leading indicator while the jobs number is a lagging indicator.
If the number beats expectations, gold and silver could sell off as the Fed might be prompted to reduce its balance sheet or talk more seriously about raising rates. If the jobs picture remains weak, the metals can be assured of free money for at least the next five months, and the big bulls will even talk of another round of quantitative easing.
In the meantime, gold and silver will continue the dance of rerating their ratio which has fallen as low as 32 last week and is now around 37, which means it takes 37 ounces of silver to buy one ounce of gold. The lower the ratio, the higher the silver price and vice versa.
The 10-year average for the gold/silver ratio is 60:1 which would imply much lower silver prices and gold as the outperformer.
One technical factor which could support this trend, although 60:1 is a pretty bearish outlook, is the futures market. The gold market is in contango, where further out contracts trade higher than the spot month. Silver is in backwardation, which means traders, who are stressed about a supply crunch, are moving the spot month higher than the contract furthest out. Contango is the norm in the futures market, and if silver reverts prices could head lower.
The physical market is signaling something similar. Adrian Ash, head of research at BullionVault.com, says that "since the close of London trade last week, wholesale silver is down 10.5% but gold is up at new record highs. Gold up, silver down is a very rare event -- less than 14% of all trading days since 1968."
Gold mining stocks, however, have yet to see the benefit of higher gold prices. Out of the 12 stocks in theCBOE Gold Index(GOX), down almost 4% year to date, only three have positive returns for the year:Harmony Gold(HMY_), Iamgold(IAG_) andGoldcorp(GG_), which reports earnings ater the close Wednesday.
Goldcorp closed 2.9% lower Tuesday at $51.18 while its peers Barrick Gold(ABX_), Newmont Mining(NEM_) and AngloGold Ashanti(AU_)closed down at $48.62, $56.22 and $48.18, respectively.
(Source: http://www.thestreet.com/story/11104851/3/gold-silver-prices-search-for-support.html)
