Gold price spiked higher

The gold price spiked higher Friday morning, climbing 0.6% to $1,528 per ounce. The price of gold rallied after the PCE deflator, the Fed’s preferred price measure, showed inflation of a mere 1% in the month of April versus a year earlier. Gold and silver prices continue to be supported by a macro-economic backdrop that shows muted inflation figures when food and energy are stripped out. Notwithstanding the importance of driving and eating for the American public, the Fed is determined to largely omit these items from their analysis. This leads to easier money, negative real interest rates, and therefore, higher gold prices.

Demand from China for Gold as private investments is likely to increase gold bullion imports

Demand from China for Gold as private investments is likely to increase gold bullion imports past 400 tonnes in 2011, according to leading metals consultancy GFMS. Philip Kalpwijk, executive chairman of GFMS, said that an increased appetite for silver, coupled with 16% annual growth forecast in industrial demand suggests that total Chinese silver consumption could surpass domestic supply this year.

“There is a widening demand for silver as investment in China because of its lower entry point,” Kalpwijk stated at a conference in Shanghai. “It is also being increasingly recognised as an physical investment asset, which will support demand.”

The substantial rise in Chinese demand has been fueled by inflation concerns and tepid returns in other sectors of the financial markets, including equities and real estate. Chinese gold demand has also been supported by the government’s encouragement of retail consumption, illustrated by its decision to expand the number of financial institutions permitted to import bullion.

The gold price climbed higher - $1,520.50 per ounce

The gold price climbed higher Tuesday, gaining $3.35 to $1,520.50 per ounce. The gold price advanced on weakness in the U.S. dollar and on the back of a research report from Goldman Sachs recommending clients “buy” commodities. The U.S. dollar fell against the euro and pound, giving a boost to gold and silver, which rose to $35.89 per ounce – up 2.4% from yesterday’s close.

Gold has held up well in recent weeks despite the weakness that has been prevalent across the commodity complex. Steve Scacalossi, Head of Sales, Global Precious Metals at TD Securities, noted that “Gold has impressed in its resilience ignoring market activity elsewhere and in cross currency terms had another good session overnight making new historic highs in both EUR and GBP.”

European sovereign debt concerns dominated the headlines on Monday, helping push the U.S.-denominated gold price up to $1,515 and the euro gold price to a new record high of €1,080 per ounce. Silver did not fare as well as the gold price, but did manage to close with a fractional gain at $35.11 per ounce. Stability in the price of gold and silver came despite a rally in the U.S. dollar, largely on the back of weakness in the euro. The dollar’s rise put severe pressure on cyclical commodities as copper tumbled 3.2% to $3.99 per pound and oil slid 2.4% to $97.70 per barrel.

Gold futures advanced on Monday amid rising concerns over the sovereign debt crisis in Europe

Gold futures advanced on Monday amid rising concerns over the sovereign debt crisis in Europe.

COMEX gold futures, per the June contract, reached an intra-day high of $1,517.80, before settling with a gain of $6.50, or 0.4%, at $1,515.40 per ounce. Several unnerving developments occurred in Europe over the weekend that spooked investors. Standard & Poor’s lowered its outlook on Italy’s credit rating, Spain’s ruling Socialist political party suffered its worst-ever defeat in regional elections, and government bond yields on Greek debt spiked to fresh all-time highs.

The concerns pressured the euro currency, which dipped below 1.40 against the U.S. dollar.

UOB Gold Savings Account is probably the simplest Gold Investment Tool

The UOB Gold Savings Account is probably the simplest, if not easiest way to invest in gold. According to the UOB website, you can buy and sell international gold – through a passbook – at prevailing market prices and transact any time during banking hours in units of one gm of gold, subject to a minimum of five gm per transaction.

To simply put, you are depositing cash into your UOB Gold Savings Account and the bank teller will convert your cash amount into grams of gold and record it in your passbook. This method of investment is considered as investing in paper gold.

To sign up, all you have to do is to approach any UOB branch and ask to open an UOB Gold Savings Account. You will be required to produce your identification card to open the account. The process is similar to opening a UOB cash savings account.

Depositing and withdrawing from your UOB Gold Savings Account is just as easy. Simply approach the bank teller at any UOB branch to make your deposit. You must bring your passbook along for each deposit or withdrawal transaction.

As the transaction is considered a deposit and does not involve any purchasing, there is no Goods and Services Tax (GST) levied. Naturally, no premium for production of gold is charged because there is no physical gold involved. The bid spread of S$0.10 between the buying and selling price for each gram of gold is considered very thin as well.

Sounds good so far? Like every investment vehicle, the UOB Gold Savings Account is without its own set of disadvantages.

Firstly, you cannot withdraw physical gold from your UOB Gold Savings Account. Only cash withdrawals are allowed.

Secondly, you will be charged an administrative fee (in grams of gold) of 0.12 gram per month or 0.25% p.a. on the highest balance per month, whichever is higher. This makes keeping low balances in your UOB Gold Savings Account not worth your while.

In my opinion, I find that the UOB Gold Savings Account is a good investment vehicle for investors who simply want their cash to be valued in terms of gold. I use my UOB Gold Savings Account for short term deposits because if the liquidity. The account also allows me to lock in on the price of gold at that period of time. Eventually, I will withdraw the amount to buy physical gold.

So if you are looking for high liquidity, ease of transactions, and do not mind the fact that you are buying paper gold, the UOB Gold Savings Account is the investment vehicle for you.

QE3 could be even bigger than QE2 and that’s very bullish for Gold

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, made his case that the recent weakness in the price of gold and silver presents a “buying opportunity.” Schiff, a long-time bull on the gold price, stated in a King World News interview that “I do believe the U.S. economy is slowing down, in fact I think it’s going to slow a lot more than people realize. But for that reason, I think that quantitative easing will not end over the summer. In fact, I think the Fed is going to step it up. QE3 could be even bigger than QE2 and that’s very bullish for Gold and very bearish for the dollar.”

While Schiff’s outlook on monetary policy aligns with his very bullish stance on the gold price, Wednesday’s release of the latest Fed minutes paints a less clear picture. The Fed minutes, a transcript of the latest Federal Open Market Committee (FOMC) meeting, disclosed a wide variety of opinions among U.S. central bankers on the Fed’s appropriate path moving forward.

An initial glance at the Fed minutes revealed discussions of asset sales, raising the Federal Funds rate, and other measures suggesting that Chairman Ben Bernanke and the Fed Governors were considering tightening monetary policy.

However, although the Fed minutes provided significant color on options for “normalizing” monetary policy, it emphasized that a “move toward such normalization” would not necessarily “begin soon.” Furthermore, the minutes noted that “participants expressed a range of views on some aspects of a normalization strategy,” including the timing and pace of asset sales versus interest rate hikes.

Gold has by far the greatest causality with liquidity

Gold have made steady gains overnight, largely supported by a weaker dollar and resurfacing concerns over the Eurozone debt situation. Physical buying remains supportive of gold below $1,500. Today’s release of the FOMC minutes will be important as a signal of the Fed’s plans for liquidity. In anticipation of the release talk/suggestions that the Fed may start to reduce the size of its balance sheet and drain liquidity from the economy are likely to surface. When the Fed drains liquidity, it will be bearish commodities in general, but gold specifically. We find gold has by far the greatest causality with liquidity, followed by crude, and then base metals in general.
However, we feel there is no reason to think that the Fed would begin tightening monetary policy (raising rates or draining liquidity) any time soon.

Inflation pressures in the US remain subdued, while the labour market still looks relatively weak. In addition, we feel that even though the Fed’s quantitative easing program may end in June, global liquidity will continue to grow as a result of government borrowing. Consequently, support from a liquidity perspective should remain in place for gold.

Gold support is at $1,477 and $1,461. Resistance is at $1,504 and $1,514.

Strong physical buying interest seems to limit the downside below $1,480

Physical buying continues to provide support for gold on approach of $1,480. However, investors still seem cautious for now as low volumes and generally sideways moves have characterised trading overnight. We maintain our view that gold should be bought on dips below $1,500, given that strong physical buying interest seems to limit the downside below $1,480.

Long term, we expect gold to consolidate above $1,500 soon. We therefore remain bullish on gold. The latest CFTC data (covering the week ended 10 May) shows that net speculative length in gold fell strongly. Falling 75.7 tonnes over the week, this was the largest drop this year. The net speculative position for gold now stands at 684.7 tonnes — down 37.8 tonnes since the beginning of the year. The fall was largely due to a drop of 71.7 tonnes in speculative longs, with
only a modest in speculative shorts of 3.9 tonnes. Although the fall in speculative longs was substantial, given that there were only minimal additions to speculative shorts, we are still reluctant to take this as signal of a market that has turned bearish on gold.

Rather, we see participants adjusting positions, which might lead to some short-term downward pressure, at the worst. Encouragingly, ETF holdings of gold saw a strong increase of 123.1 tonnes over the week ended 13 May. This assures as that investor interest in gold is still relatively strong. Coupled with the strong physical interest we’ve seen below $1,500, this supports
our long-term bullish view on gold.

In terms of data flow today, we would keep an eye on US industrial production and capacity utilisation, as well as housing data. These releases will be watched closely for indications of a strengthening US economy. Better-than-expected results could see renewed dollar strength, as well as a reduction in risk aversion, which would see precious metals on the back foot.

Gold support is at $1,486 and $1,478. Resistance is at $1,504 and $1,513.

The strong physical buying interest with gold below $1,500 supports our short-term tactical view | Singapore GOLD Investment

The strong physical buying interest with gold below $1,500 supports our short-term tactical view | Singapore GOLD Investment

Gold have been sold into rallies | Malaysia Gold Investment

Gold have been sold into rallies | Malaysia Gold Investment

The strong physical buying interest with gold below $1,500 supports our short-term tactical view

After the previous week’s dramatic fall, open interest rose marginally last week, by 1.4 tonnes. As of last Friday, gold open interest stood at 1,650 tonnes on COMEX, well below last year’s average of 1,787 tonnes. Unsurprisingly, given the modest change in open interest, prices remained largely unmoved from the previous Friday.

The strong liquidations experienced during the period the latest CFTC data covers are very much evident. Net speculative length fell strongly. Falling 75.7 tonnes over the week, this was the largest drop this year. The net speculative position for gold now stands at 684.7 tonnes — down 37.8 tonnes since the beginning of the year. The fall was largely due to a drop of 71.7 tonnes in speculative longs, with only a modest in speculative shorts of 3.9 tonnes. Although the fall in speculative longs was substantial, given that there were only minimal additions to speculative shorts, we are still reluctant to take this as signal of a market that has turned bearish on gold. Rather, we see participants adjusting positions, which might lead to some short-term downward pressure, at the worst.

Encouragingly, ETF holdings of gold saw a strong increase of 123.1 tonnes over the week ending 13 May. This assures as that investor interest in gold is still relatively strong. Coupled with the strong physical interest we’ve seen below $1,500, this supports our long-term bullish view on gold.

After the larger-scale liquidations, net speculative length as a percentage of open interest has fallen even further. Currently at 27%, this is well below the 31% average seen during 2010, and shows a market far from overextended.

Similar to other commodities, over the past week Gold have been sold into rallies. However, as pointed out last week in Commodities Daily, they believe that gold should be bought on dips below $1,500. The strong physical buying interest with gold below $1,500 supports our short-term tactical view. Long term, we expect gold to consolidate above $1,500 soon. We therefore maintain our core long view on gold.

Gold support is at $1,479 and $1,464. Resistance is at $1,512 and $1,531.

Physical buying interest and a weaker dollar have managed to lift gold

Physical buying interest and a weaker dollar have managed to lift gold, and along with it. Once again, strong physical buying, especially out of Asia, helped curb momentum-driven selling that had pushed gold below $1,500. This confirms our tactical view that gold should be bought on dips below $1,500, as physical demand places a floor at these levels.

Yesterday’s reserve requirement increase by China’s central bank did not have much bearing on Gold markets. This is unsurprising, as we’ve highlighted previously my old posting reveals that of all the monetary policy tools the PBOC employs, reserve requirements have the most benign impact on commodities.

A slight uptick in US jobless claims figures and indications of growing business inventories, might have lent some support to the complex on raised concerns over the strength of the US economic recovery. Slightly worse-than-expected US producer inflation (6.8% y/y versus an expected 6.5% y/y) might have also renewed fears over rising inflation, and seen some inflationhedge
motivated buying. Better-than-expected Eurozone GDP numbers have seen a slight pullback in gold , as this has most likely increased confidence and dampened the safe-have appeal of the complex. As well as Gold in general if the dollar should weaken further.

US consumer inflation numbers this afternoon, could have some influence in that they might prompt speculation surrounding the Fed’s end to quantitative easing and raise inflation concerns. In anticipation of the release of the FOMC minutes next week speculation that the Fed may start to reduce the size of its balance sheet and drain liquidity from the economy will once again surface. When the Fed drains liquidity, it will be bearish commodities in general, but gold specifically. We don’t believe that the Fed will seriously contemplate tightening monetary policy before the scheduled end of QEII in June, especially given the benign inflation outlook and stubbornly high unemployment.

Gold support is at $1,492 and $1,470. Resistance is at $1,523 and $1,531.

Chinese inflation and monetary aggregate figures, at first prompted some knee-jerk selling

Apart from a short-lived dip early in the New York trading session due to rumours that there might be a hike in margin requirements for COMEX gold, gold and silver have continued to make steady gains. As we had anticipated, the release of Chinese inflation and monetary aggregate figures, at first prompted some knee-jerk selling. Consumer inflation for April came in higher
than expectations at 5.3% y/y (consensus: 5.2% y/y), which heightened the market’s concerns over rising global inflation. This has provided some support for Gold, more so for gold and silver, as investors seek to protect the value of their wealth from rising prices.

Eurozone debt concerns continue to play a supportive role, and along with renewed physical interest, we see the potential for more upside today for gold and silver. Looking specifically at gold, we have seen strong physical buying interest in recent days. The buying interest on Friday last week was the strongest we’ve seen since early February. While consistent physical buying interest has come from most notably from India, we are witnessing a broader interest from Asia in general — even with gold above $1,500. We believe gold should be bought on approach of $1,500. Strategically we remain bullish on gold, even at these levels.

Gold support is at $1,513 and $1,503. Resistance is at $1,527 and $1,530.

Gold have continued to rebound from last week’s sell-off

Gold have continued to rebound from last week’s sell-off. Helped along by renewed concerns over the Eurozone debt situation (after Greece’s credit rating downgrade by S&P), gold and silver made steady gains in New York trade, hampered somewhat by a stronger dollar in relation to the euro. On the Asian markets, gold and silver’s momentum began to fade, as persistent investor selling emerged.

With the resurfacing of Eurozone sovereign debt concerns, we expect to see continued appetite for gold and silver and, given the recent sell-off, expect to see a return of investor as well as physical buying in search of value.

Gold support is at $1,498 and $1,481. Resistance is at $1,523 and $1,531.

Gold - Net speculative length fell marginally

According to the latest CFTC (Commodity Futures Trading Commission) data, released on Friday 6 May 2011 (note that this data covers the week ending 3 May 2011 and does not include the sharp drop in commodities markets experienced at the end of last week):

1. Last week saw April’s gains all but erased as open interest fell by 47 tonnes. As of last Friday, gold open interest stood at 1,662 tonnes on COMEX, just shy of the 1,660 tonnes at the beginning of April. The fall in open interest was accompanied by a significant 4.4% w/w fall in prices.
2. Net speculative length fell marginally, after the previous week’s dramatic drop of 43.1 tonnes. Falling 5.8 tonnes over the past week, the net speculative position for gold now stands at 760.4 tonnes — down from this year’s high of 809.2 tonnes recorded only two weeks ago. The fall was largely due to a modest drop of 9.3 tonnes in speculative longs. The
   fall in speculative shorts of 3.5 tonnes helped to lessen the overall decline in net speculative length. Given that the changes in speculative positions were minimal, we would not take this as an overly bearish signal for gold, at least not over the medium term. Rather, we see participants adjusting positions which might lead to some short-term downward pressure at the worst. Encouragingly, ETF holdings of gold saw a modest increase of 5.1 tonnes over the week.
3. We do note that speculative shorts, currently at 133.8 tonnes, are still relatively high compared to last year’s average of 90.7 tonnes, indicative of a market not as confident in gold’s prospects as in 2010. This is most likely attributable to concerns over an end to US monetary accommodation.
4. Net speculative length as a percentage of open interest is still largely in line with the 31% average seen during 2010, and an encouraging sign that the speculative market is still far from overextended.

Gold has stopped sliding

Silver just can’t get a break as margins were raised yet again Fridays essentially putting a nail in the coffin. The white metal seems exhausted after its biggest one week drop since the 1980s over 30% and it is still lower today but now this sell off appears to be overdone.

But don’t expect any great recovery soon as the higher margins combined with the bloodshed of recent days have left many of the would be supporters of the market licking their wounds. On the flip side we had a very positive Non Farm Payroll report this morning which has boosted the rest of the group. This positive number is fundamentally bullish for the Auto Industry which is being reflected in the higher price of both Pt and Pd.

Gold has stopped sliding, which reached as low as 1460, and with no ECB rate hike due out until July and inflation expected both in Euro Zone and USA we can expect it continue to trade higher for the near term. The one good news for us regular folk is that in this commodities collapse Crude Oil has come off and is now below $100, maybe the gas pumps will reflect that this weekend.

Gold is now below $1,500, a level we’ve been targeting for some time now

Gold is now below $1,500, a level we’ve been targeting for some time now. While maintain our position that we see better value in a long gold position here, our bias still favours more downside. We judge gold relative to our measure of global liquidity – we believe it can come down more, closer to $1,450. Silver has tested its 100d MA at $34.43. Given our view on gold and base metals, we view further losses as the more likely outcome. A break below $34.43 could see silver all the way back to $29/30.

Gold support is at $1,458 and $1,430. Resistance is at $1,518 and $1,550.