Gold Price Bounces, "Looks Vulnerable" as Treasury Bonds Fall Again, Indian Demand Rallies - 15 March 2012
The Gold Price crept higher towards $1650 per ounce early in London on Thursday, adding 0.9% from yesterday's new 8-week low as crude oil and industrial commodities slipped once again.
Silver Bullion bounced 2.3% to $32.40 per ounce, but held more than 5% down for the week after being "very much influenced" by the Gold Price falling through $1700 on Tuesday, according to a Swiss dealer.
A rally in Japanese and Hong Kong equities failed to carry over into Europe's trade today, but US stock-market futures pointed higher.
US Treasury debt fell in price for the seventh session running, nudging the 10-year yield up to 2.29% – a near-5 month high – as Washington's bonds extended their longest losing streak since 2006, according to Bloomberg data.
"The [bond] market is on the back foot," says Lloyds TSB's head of strategy Charles Diebel.
"The catalyst seemed to be the Fed acknowledging the better growth."
Consensus forecasts for Thursday's US jobless data were for another fall in the number of people claiming unemployment benefit.
Factory-gate and consumer price data – due today and Friday respectively – are forecast to show a slight rise.
"Overall, the [ Gold Price ] looks rather vulnerable with a likelihood of testing lower levels before it resumes it upward run," says refinery and finance group MKS in its latest note.
"What seems to be surprising at these levels is lack of firm physical demand."
Over in India – the world's No.1 gold consumer nation – "Demand has improved significantly in the past two days," a Mumbai dealer told Reuters today.
"Prices have fallen and there is also concern about import duty hike in tomorrow's budget."
India's government doubled gold import duties – and gave its domestic recycling and refining industry a price advantage – at the start of 2012.
Despite yesterday's fresh drop in the Gold Price, the quantity of Gold Bullion held to back the SPDR Gold Trust – the world's single largest exchange-traded gold trust (ETF), capitalized at $68 billion on the New York Stock Exchange – remained unchanged after slipping half-a-tonne Tuesday to 1293.3 tonnes.
Gold ETF holdings worldwide were unchanged Wednesday at a record high of 2409.7 tonnes, according to Bloomberg data.
Open interest in US Gold Futures crept 0.6% higher on Wednesday to 445,163 contracts – greater by 1.2% from a week before.
"Gold dropped bearishly [on Wednesday] through our Fibo support level," says Russell Browne at bullion bank Scotia Mocatta, pointing to another Fibonacci level – based on a number series used by some technical analysts to spot important prices – for the "the next key support level at 1625.
"A definitive close below this support level opens up a full retracement to the December low of 1522."
On the currency market Thursday morning, the US Dollar eased back from last night's rise towards 7-weeks against the Euro, which fell near $1.30.
That held the Gold Price in Euros below €40,600 per kilo (€1263 per ounce).
Spain today sold €3 billion in new debt, paying 3.37% annually on 4-year debt – just less than it paid at a sale in January, despite prime minister Mariano Rajoy saying last week that Madrid will breach the newly-agreed budget deficit limit for Eurozone members.
Europe's benchmark Brent crude slipped but held near record-highs in Euro and Sterling terms.
The Reuters newswire claims that US president Obama and British prime minister Cameron yesterday discussed using emergency oil reserves to bring prices lower.
"The window for solving [Iran's nuclear program] diplomatically is shrinking," Obama told a press conference.
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