Gold’s London AM fix this morning was USD 1,636.00, EUR 1,243.16, and GBP 1,035.97 per ounce. Yesterday's AM fix was USD 1,656.00, EUR 1,248.21 and GBP 1,042.95 per ounce.
Silver is trading at $31.80/oz., €24.17/oz. and £20.14/oz. Platinum is trading at $1,617.50/oz., palladium at $669.75/oz. and rhodium at $1,425/oz.Cross Currency Table – (Bloomberg)
Gold rose 0.08% or $1.40 in New York yesterday and closed at $1,649.30/oz. Gold traded flat in Asia overnight and fell in European trading which now has gold now trading at $1,638.23/oz.
Gold has broken below recent support at $1,640/oz. and reached as low as $1,632.45/oz. this morning – below its recent low and its lowest price since January 16. Gold looks like it will go lower on technical weakness and the next level of support is $1,600/oz. Below that again support is at $1,523/oz. – the low seen December 29.Gold 1 Year - (Bloomberg)
Gold may be supported at these levels as demand in India is expected to increase due to the 5 day closure of jewelry shops which has led to pent up demand on the subcontinent.
Gold is also likely to be supported by inflation pressures. Fed Chairman Ben Bernanke said before congress that rising oil prices could lead to “short-term inflation pressures”. Retail-gasoline prices have skyrocketed 18% this year to a 10 month high of $3.864/gallon.
Higher fuel costs “act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy”, the Fed chief said to the House Committee on Oversight and Government Reform.
Bernanke also warned that Europe must further support its banks, and warns its financial and economic situation ‘‘remains difficult,’’ even as stresses have declined.
The global economy remains on shaky ground. China’s manufacturing activity contracted for its 5th straight month, the US recovery is still very early to call, and the euro zone debt crisis may not be finished. Eurozone PMI data is due later today which will show how the economy is doing after Greece averted default earlier this month.
Thomson Reuters GFMS have said that gold at $2,000/oz. is possible - possibly in late 2012 or early 2013.
Thomson Reuters GFMS Global Head of metals analytics, Philip Klapwijk, featured on Insider this morning and advised investors to "buy this gold dip”.
Gold should be bought on this correction especially if we go lower still as we may need a shake-out of "less-committed investors."
Klapwijk suggested that a brief dip below $1,600 is on the cards but the global macro environment still favors investment, notably zero-to-negative real interest rates and he would not rule out further easing by either the ECB or the Fed before year end.
The Osborne gold comments were gold friendly despite the UK Treasury denying that the UK has any plans to rebuild their gold reserves.
Osborne was obviously scoring cheap political and economic points at his predecessor Gordon Brown and the opposition Labour party. However, the comments underlined the increasing importance of gold reserves to all nations - especially one's whose credit ratings are at risk due to appalling fiscal situations.
While the UK adding to its gold reserves seems a remote possibility now it is a possibility as gold reserves would help protect sterling from a currency crisis. Also, most of the UK's current foreign exchange reserves are in fiat currencies which also face the risk of devaluation in the coming years.
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(Bloomberg) – Russian February Gold Holdings Fell to 28.3 Million Troy Ounces Russia’s central bank reduced its gold holdings to 28.3 million troy ounces last month, from 28.4 million troy ounces at the end of January, according to a statement published on its website today.
The stockpile was valued at $50.2 billion as of March 1, compared with $48.8 billion a month earlier, Bank Rossii said.
(Bloomberg) – India RBI Tightens Rules for Loan-Against-Gold Providers Reserve Bank says non-banking finance companiess that provide loans against gold need to maintain 12% tier-1 capital by 2014. RBI bars these NBFCs from lending against gold coins and bullion.
(Bloomberg) – Gold May Jump to $2,050 on Dollar, Oil, Société Générale Says Gold may jump to $2,050 an ounce by the third quarter on a weaker U.S. dollar and higher oil prices, Société Générale SA said.
Investors should “be wary” of silver, Michael Haigh, an analyst at the bank, said in a report dated today. Aluminum and zinc because they have large inventories will have a hard time rising above the marginal cost of production, and China’s gross domestic product growth will slow “substantially” in the second half, he wrote. Wheat may benefit as ranchers switch from corn for animal food, according to the report.
(Bloomberg) – H.K. Mercantile Bourse Plans RMB Gold, Silver, Copper Contracts The Hong Kong Mercantile Exchange plans to introduce gold, silver and copper contracts that will denominated in Chinese yuan, Albert Helmig, president of the bourse, said in Shanghai today.
The copper futures will be settled in cash and trade in units of 5 metric tons between the hours of 9 a.m. to 11 p.m. local time, he said in a speech at an industry forum. The bourse has already filed an application with the Hong Kong regulator for the contracts, he said.
(Dow Jones) – Russia Central Bank Gold And Forex Reserves $505.4B Russia's gold and foreign-exchange reserves fell by $2.3 billion to $505.4 billion in the week to March 16, central bank data showed Thursday. The drop comes after a rise of $3.9 billion in the previous week. Russia holds the world's fourth-largest gold and foreign-exchange reserves, after China, Japan and Saudi Arabia.
(Dow Jones) – Turkey Targets Gold Stashes The Turkish government, facing a bloated current-account deficit that threatens to derail the country's rapid expansion, is trying to persuade Turks to transfer their vast personal holdings of gold into the country's banking system.
The push to tap into the individual gold reserves – the traditional form of savings here – is part of Ankara's efforts to reduce a finance gap that is currently about 10% of gross domestic product.Gold shops at the Grand Bazaar in Istanbul, above. Many Turks hold a high percentage of their personal wealth in gold, fearing economic volatility.
Government officials say the banking regulator will soon publish a plan to boost incentives for consumers to park their household wealth inside the financial system. Banking executives said they are considering new interest-yielding gold-deposit accounts that would allow savers to withdraw gold bars from specially designed automated teller machines.
The moves come after the central bank in November announced that lenders could hold up to 10% of their local-currency reserves in gold, in part to tempt Turkey's gold hoarders to deposit their jewelry, coins or bullion at banks.
Economists say the policy shift is designed to change Turks' historic preference for storing a high percentage of personal wealth outside the banking system as a way to protect themselves against the economic volatility that has periodically hit Turkey in recent decades.
The effort is one front in a broader battle to encourage more savings while curbing the ballooning current-account deficit – a pressure point many investors fear could upend a fast-growing economy, estimated to have expanded more than 8% last year. Turkey's current-account gap has expanded faster than expected in recent weeks amid a surge in oil prices and data showing unexpectedly high consumer demand.
"Turkey has historically been hit by crises and inflation, so the tradition of holding gold outside the system could be hard to shift," said Murat Ucer, an economist at Global Source Partners, an Istanbul-based research consultancy.
The size of the gold haul stored outside Turkey's banking system is hard to quantify; no data reliably capture the scale of the informal economy. The Istanbul Gold Refinery estimates the figure at 5,000 metric tons, valued at $270 billion. Recent numbers show many consumers have boosted home-held deposits even as the country's tightly regulated banking system won plaudits for comfortably weathering the financial crisis.
Last year, as the Turkish lira tumbled almost 20% against the dollar – the fastest fall of any currency in the world – Turkish demand for gold bars and coins surged 99% from the previous year, according to data from the World Gold Council.
That suggests that despite a tripling of incomes and a sharp reduction of unemployment in the past decade, Turks remain nervous that holding too much of their assets in banks could leave them exposed to losses.
Data also show savings held inside the financial system have declined sharply as the once-volatile economy entered a period of relative stability after a banking crisis in 2001. According to the International Monetary Fund, Turkey's savings rate last year plunged to the lowest level in the world for any economy larger than $100 billion – except Greece, Portugal and Ireland – as Turks ramped up personal spending and borrowing.
Some economists warn the government's initiative is a sideshow, saying policy makers should instead focus on overhauling Turkey's arcane tax regulation, and on boosting public coffers by effectively collecting taxes.
"The government should be focused on the Turkish tax code, but that would mean alienating people, and there seems little appetite to do that," said Mert Yildiz, an economist covering emerging Europe at Renaissance Capital, a Moscow-based investment bank.
For some Turks, the government will have to unveil a lot more sweeteners before they part with the family gold. "I'm keen to save, so keeping gold at home is easy for me; there is no complicated procedure," said Ayten Altin, a 70-year-old housewife in Istanbul. "In an emergency, I can convert it to cash and I don't have to wait for the bank to say the asset has matured."