Gold prices retreat after sharp post-Fed rally

Wednesday, 27 February 2013 19:59 Posted by Abdul Ahad

 

LONDON: Gold retreated on Wednesday after rising more than 1 percent in the previous session as investors cashed in some gains ahead of a second day of testimony by Federal Reserve Chairman Ben Bernanke and a string of US economic data.

The metal posted its biggest one-day rise in three months on Tuesday after Bernanke provided reassurance on the Fed's commitment to loose monetary policy, burnishing bullion's appeal as a hedge against inflation.

It struggled to maintain those gains, however, as investors remained wary over gold's longer-term prospects, given expectations for a further recovery the economic cycle, which could favour higher-risk assets.

Spot gold was down 0.4 percent to $1,606.51 an ounce at 1044 GMT, off a 1-1/2-week high of $1,619.66 on Tuesday. The metal had touched a seven-month low of $1,554.49 on Feb. 21.

US gold futures for April delivery were down 0.6 percent at $1,606.30.

"The drop to $1,554 we saw in the past 10 days was really too quick, and prices didn't need too much input to regain the $1,600 mark yesterday," Natixis analyst Bernard Dahdah said.

"Today prices are slightly lower ... we see gold supported around these levels as the Fed's second day of testimony should reiterate a QE-supportive stance."

Bernanke strongly defended the US central bank's stimulus measures before Congress on Tuesday, easing fears it would cease buying bonds through so-called quantitative easing sooner rather than later.

He is due to testify before the House Financial Services Committee at 1500 GMT.

The three rounds of QE from the Fed have helped gold stage a record-breaking rally in the past few years as investors have worried about currency debasement due to money-printing and have sought to store value in gold.

But concerns that the central bank could exit the policy on signs of a fledgling economic recovery have weighed on the metal over the past weeks.

The market is also likely to monitor US durable goods data and pending home sales figures to assess the state of recovery in the world's biggest economy.

"Jitters on the currency market are by no means over where macro numbers from the United States and Europe continue to lean in favour of the dollar, and given the current debate over ongoing easing within the FOMC (Federal Open Market Committee) itself," VTB Capital said.

The dollar cut some earlier losses against the euro after a bond auction in Italy saw healthy demand but rising borrowing costs. The auction was the first test of investor demand for the country's debt after inconclusive weekend elections spooked financial markets, leaving stock markets mixed today.

Worries that Italy's inconclusive elections could drag the euro zone into another crisis have supported demand in safe-haven assets such as gold and US Treasuries in the previous session.

ETF HOLDINGS FALL FURTHER

As a gauge of investor interest, holdings of the SPDR Gold Trust, the world's top gold-backed exchange-traded fund, fell 2.408 tonnes from the previous session to 1,270.44 tonnes on Feb. 26, in its sixth session of decline.

The sell-off in exchange-traded funds (ETFs) since the start of the year is mostly due to a perceived improvement in the global economic outlook and concerns on the longevity of the Fed's quantitative easing, analysts said.

"The sharp decline in gold ETFs in February underscores the weakness in gold sentiment that has been prominent recently," UBS said in a note.

"The realisation over the coming weeks that there is still much uncertainty ahead and the Fed is more likely to stay the course as highlighted by Chairman Bernanke's comments yesterday should see some reversal in the recent ETF flows."

Physical buying in Asia slowed after gold climbed for four days straight.

Among other precious metals, platinum was trading at par with gold, having dipped into a discount for the first time in over a month in the previous session. Heightened risk aversion was hurting industrial commodities such as the autocatalyst metal.

Spot platinum dropped 0.9 percent to $1,604.74. it slipped to a seven-week low at $1,577.49 an ounce on Tuesday.

Palladium was down 1.3 percent at $733.50. Silver was down 0.9 percent to $29.10.

Copyright Reuters, 2013

Gold Sentiment Sour Like 1976, 1999 Dream Buys

“To hoarders and speculators,” says Time magazine, “gold lately has had about as much luster as a rusty tin can.”

Rings true here in February 2013, but this clanging bell – entitled The Great Gold Bust, and drowned out as a signal to fill your boots only by the New York Times‘ infamous Who Needs Gold When We Have Greenspan? of May 1999 – was rung back in August 1976, right at the very nadir of a 50% pullback in the 1970s’ long bull market in gold.

 

Gold bars (Image credit: AFP via @daylife)

“In three chaotic days last week, gold fell $14 on the London market,” Timeexplained 37 years ago, noting gold’s plunge from $198 per ounce at the start of 1975. Gold’s new 31-month low of $105.50 an ounce “[was] a dismal figure for goldbugs,” the magazine went on, “who not long ago were forecasting prices of $300 or more.”
Of course, gold went on to gain 750% over the next three and a half years.

more ...http://www.forbes.com/sites/greatspeculations/2013/02/27/gold-sentiment-sour-like-1976-1999-dream-buying-points/

Gold Up on China Demand

By Esther Tanquintic-Misa | February 26, 2013 4:28 PM EST

Prices of safe haven yellow metal gold rose to $1,598.55 an ounce, or as much as 0.3 per cent, at 11:25 a.m. in Singapore on increased from China even as the country continued to produce more gold within its confines.

View Full Image

Reuters
Gold and silver bullion

"The re-emergence of physical buyers in China following the Lunar New Year celebrations was an encouraging sign," Howard Wen, an HSBC Securities analyst, wrote in a note.

China's markets were closed in the week of Feb. 11.

Chinese people long held the tradition that buying gold is a far more worthy investment than buying stocks or any other form of investment. This tradition is being made sure that it passes from every Chinese family generation.

Current debacle in Italy of a potentially divided parliament was likewise seen a triggering factor to the safe-haven bullion buying, Mr Wen added.

But experts warned people, not only the Chinese, should refrain from buying and accumulating more gold.

"People should stop buying gold now, because the metal's technical chart is very negative. Also, the momentum behind the gold surge since 2008 was quantitative easing, and now there is a very strong expectation that the easing will come to an end," Deng Wenyi, from Chengdu-based Huaxi Securities, told the Global Times Sunday.

On Monday, China's Ministry of Industry and Information Technology said the country, a global consumer of the yellow metal, increased its gold output to 403 tonnes in 2012, up by 11.66 per cent over a year ago.

Of the total, 341.8 tonnes were produced by gold mines, while the remaining 61.3 tonnes were byproducts of nonferrous metal smelting, the ministry said.

For the sixth consecutive year, China has emerged as the world's top producer of the safe haven yellow metal gold. It maintains around 1,054 tonnes of gold reserves.

Its consumption of the yellow metal in 2012 jumped 9.35 per cent to 832.18 metric tonnes.

To report problems or to leave feedback about this article, e-mail:e.misa@ibtimes..com.au

To contact the editor, e-mail: editor@ibtimes.com

http://au.ibtimes.com/articles/439427/20130226/prices-safe-haven-yellow-metal-gold-rose.htm#.USxQxaWfiSo

UBS is predicting a ‘major gold rally’ this year

February 25, 2013, 9:55 AM

Will the U.S. economy make or break commodities?

That was the question posed by UBS in a note to investors on Monday, as gold and other precious and base metals enjoyed a snappy little recovery. April goldGCJ3 +1.13% was up nearly $20 an ounce. Gains were helped in part by a globalequities rally that looked to be taking hold Monday. Read more on gold trading.

Getty Images

So, the conclusion from UBS?  As analyst Julien Garren explains in a note, the role the U.S. economy plays in influencing commodity prices is a delicate dance, but providing investors can be patient, it’s a winner for gold. Part of the selloff for gold last week was blamed on Fed minutes that  triggered worries the central bank would wrap up its big asset-buying program faster than expected. That means holding gold as an alternative to the U.S. dollar, seen as vulnerable to the Fed’s stimulus policies, is less urgent.

more...  http://blogs.marketwatch.com/thetell/2013/02/25/ubs-is-predicting-a-major-gold-rally-this-year/

Russia, Kazakhstan Expand Gold Reserves for Fourth Month

By Glenys Sim - Feb 25, 2013 9:53 AM GMT+0400

Russia and Kazakhstan expanded gold reserves for a fourth straight month in January, while Azerbaijan acquired bullion for the first time in more than a decade as central banks sought to diversify their assets.

Russian holdings climbed 12.2 metric tons to 970 tons last month after gaining 8.5 percent over 2012, according to International Monetary Fund data. Kazakhstan’s hoard grew 1.5 tons to 116.8 tons, following last year’s 41 percent expansion, data on the IMF website showed. Azerbaijan bought 1 ton after reporting no holdings since 1999 and Mexico sold 0.1 ton.

more.. http://www.bloomberg.com/news/2013-02-25/russia-kazakhstan-expand-gold-reserves-for-fourth-month-1-.html

China 2012 gold output up nearly 12%: report

Published: 24 Feb 2013 at 12.43

Gold production in China, the world's second largest market for the precious metal, surged nearly 12 percent year-on-year last year despite a slowdown in the domestic economy, state media reported.

Output rose to 403.1 tonnes in 2012, up 11.66 percent from 2011, the official Xinhua news agency said late Saturday, quoting figures from the Ministry of Industry and Information Technology.

China is the world's second largest consumer of gold after India. A global industry group, the World Gold Council, has put China's consumer demand for gold at 776.1 tonnes last year, flat from 2011.

The council attributed the stable Chinese demand to a slowdown in the domestic economy and consolidation in gold prices which discouraged investors, according to its latest report released this month.

more... http://www.bangkokpost.com/news/world/337481/china-2012-gold-output-up-nearly-12-report

Jewellers' gold saving scheme not for investment

Indians' appetite for gold hasn't gone down despite higher tax on gold imports this year

Ask ten people around you about investment in gold and 8 or 9 are likely to say they have jewellery worth an x amount. A recent report by the World Gold Council showed India’s gold demand stood at 262 tonnes in the last quarter of 2012 as opposed to 185.5 tonnes in the corresponding period the year before. Despite the government's increase in customs duty on gold imports, the import of yellow metal only dropped 12 per cent decline at 864.2 tonnes last year compared with 986.3 tonnes in the year before.

 This appetite did not reduce after the higher tax on gold imports this year too, say industry experts.
 Says  Balram Garg, MD of PC Jewellers, “The import duty hike has been passed on to the customers.”

more... http://www.business-standard.com/article/markets/jewellers-gold-saving-scheme-not-for-investment-113022300259_1.html

Gold Prices Halt Losing Streak

NEW YORK (TheStreet) -- Gold prices rose Thursday after the yellow metal pared early-session losses that had accrued because of uncertainty as to whether the Federal Reserve's would continue its highly accommodative policies past 2013.

Gold for April delivery tacked on 60 cents to settle at $1,578.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,584.40 and as low as $1,554.30 an ounce, while the spot price was popping $13.80, according to Kitco's gold index.

more... http://www.thestreet.com/story/11848363/1/gold-prices-halt-losing-streak.html?cm_ven=GOOGLEN

India Seen Boosting Gold Tax for Second Time to Cut Deficit

India, the world’s biggest gold buyer, may increase import taxes for a second time this year as it seeks to narrow a widening current-account deficit, curbing demand for bullion in jewelry and investment.

“There’s a feeling that the government is looking at increasing the duty again, maybe to 8 percent,” said Bachhraj Bamalwa, chairman of the All India Gem & Jewellery Trade Federation. “The industry fears they may re-impose the excise tax, which was scrapped last year.” The levy is now 6 percent.

more... http://www.businessweek.com/news/2013-02-20/india-seen-boosting-gold-import-duty-second-time-to-cut-deficit

Traders rush to buy gold ahead of budget

By Rujun Shen

SINGAPORE | Wed Feb 20, 2013 2:42pm IST

(Reuters) - Indian traders rushed to buy gold on worries the government may take more steps to curb soaring imports of the precious metal when it presents its budget later this month, while Chinese buying eased from levels seen earlier in the week.

Alarmed by a mounting current account deficit, India moved to rein in its gold imports -- second only to oil in value -- by raising duties to 6 percent from 4 percent in January.

But traders snapped up supplies ahead of the duty, sending India's gold imports last month to their highest in 1-1/2 years and undermining the government's efforts to control the ballooning deficit that hit a record 5.4 percent of gross domestic product in July-September.

"Most people in the market are concerned about policy changes in the budget," said a Mumbai-based dealer.

"Some sort of measures to curb gold imports can be there, that's why bullion players, especially jewellers, are increasing their stock levels."

more... http://in.reuters.com/article/2013/02/20/india-union-budget-2013-asia-gold-idINDEE91J05D20130220

Audit of Fed's gold finds it's safe, more pure than expected

NEW YORK — Turns out the Federal Reserve's gold is secure and a bit more pure than previously thought — or so the government says.

Auditors spent weeks last year in a vault five stories beneath Manhattan counting, weighing and drilling small holes into gold bars owned by the U.S. Treasury.

It was the first time the Treasury's inspector general had audited the department's gold held by the Federal Reserve Bank of New York, which has captured the imagination of Hollywood as well as government skeptics.

The audit's results are in: The New York Fed's operations and controls are up to snuff, and the U.S. gold on deposit is a bit finer than Treasury records had indicated.

more ... http://www.latimes.com/business/la-fi-0219-gold-audit-20130219,0,1588802.story

Brace for Big Drop If Gold Breaches This Level

Gold bounced back on Monday from a drubbing that sent the precious metal to a six-month low late last week, however, analysts say further upside is dependent on whether gold can hold on to a key support level over the next few days.

"I think today (Monday), because we've had a relatively good bounce back, the market will focus on $1,600 and the ability for gold to trade through $1,630 will be quite critical," said Jonathan Baratt, founder of the commodities newsletter Barratt's Bulletin, referring to $1,600 as an important psychological level.
"If it doesn't do that over the next few days, we would look for lower prices," he said.

more... http://www.cnbc.com/id/100467073

The race to debase and the outlook for gold

What a debacle! The G7 issues a rare statement on exchange rates that is intended to calm growing fears of an international currency war. Then they immediately turn around and start bickering amongst themselves about what it really meant.

In a terse, four-sentence announcement on Feb. 12, the G7 ministers reaffirmed “our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets”. The statement went on to say that fiscal and economic policies of member countries will be aimed at dealing with domestic economic issues and “will not target exchange rates”. The countries agreed that “excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability”.

more... http://www.forbes.com/sites/gordonpape/2013/02/16/the-race-to-debase-and-the-outlook-for-gold/

Peter Schiff On Current Gold

Metal or miners: How should advisers gain access to gold?

14 February 2013 | By Tanzeel Akhtar

Gold prices are predicted to hit $2,000/oz this year from current levels of around USD1,670/oz as a number of factors combine to support the yellow metal.
Despite this - and the fact that gold prices have been elevated against historical norms over the course of the crisis - gold producers themselves remain cheap. Why is this and should investors consider exposure to the commodity or its miners?

more... http://www.fundweb.co.uk/fund-news/metal-or-miners-how-should-advisers-gain-access-to-gold/1066030.article

World gold demand slid in 2012

An industry groups says global gold demand slipped last year on reduced buying in India, the world’s biggest market.
Central banks and institutional investors stepped up their purchases of the precious metal last year but it wasn’t enough to offset the decline, according to the World Gold Council.
The council said on Thursday that 4,405.5 metric tons were sold in 2012. That’s down 176.8 metric tons, or 4 percent, from 4,582.3 metric tons in 2011.
However, the value of gold sold last year rose to an all-time high of $236.4 billion. That’s mainly because of the rising price for the yellow metal, which rose 6 percent to an average of $1,669 per ounce.
The council said gold buying in India fell 36 percent in the first half of 2012.

more... http://www.khaleejtimes.com/kt-article-display-1.asp?xfile=data/commodity/2013/February/commodity_February3.xml&section=commodity

Gold at $5,000 and beyond: Peter Schiff sticks to his call

February 13, 2013, 3:58 AMSo what does one of the biggest gold bulls out there have to say about recent action that has been anything but bullish for the precious metal?

Peter Schiff

“It’s hardly any move. These are small moves and the media likes to make a lot of noise whenever this happens. ‘We told you, gold’s a bubble. Get out,’” says Peter Schiff , the chief executive and chief global strategist of Euro Pacific Capital, who has been calling for gold to hit $5,000 since 2000, when it traded at around $300 an ounce.
Gold has languished since Monday’s pummeling, which saw it hit five-week lows. And gold is being outperformed by every other precious/base metal out there so far this year. HSBC lifted its silver /quotes/zigman/8702780SIH3+0.36% forecasts on Wednesday. (Also, check out 7 gut checks, which mentions what one hedge fund has said about gold recently.)

But Schiff is nonplussed. “If you compare the volatility to stock markets, it’s a lot less volatile. Also, whenever the stock market makes a nominal new high, the bias in the media against gold goes up,” says Schiff. (Watch Dennis Gartman of The Gartman Letter on CNBC talking about how gold is breaking down.)
Schiff’s big gold call ties into his extremely bearish view on where the dollar is headed, amid the money-printing from the Fed and other central banks and hyperinflation that he says is coming. Watch Schiff on Dow at 14,000 is no big deal
Quantitative easing is one reason many gold bugs like Schiff think the precious metal is a winner in the long run. The more money central banks print in a bid to help growth, the more it may weaken their currencies. And that works in gold’s favor. Conversely, efforts (or anticipation of such efforts) to rein in monetary stimulus tend to clip gold. Check out: Confusion reigns over G-7 position on yen
“We are creating so much money. Japan, Europe, China, the whole world is engaging in a race to debase. Everybody thinks inflation is good, printing money is good, a weak currency is good,” said Schiff.
In some ways, Schiff’s call has been a good one. Gold prices had run up by a factor of five by August 2011, when they hit a settlement high just under $1,900 an ounce on the New York Mercantile Exchange.
But the gold rally has stalled since then, putting Schiff’s call even further into the ether. On Monday, the April contract /quotes/zigman/8702781GCJ3+0.15% settled below $1,650 an ounce, a five-week low. And it’s been pretty much rangebound since.
But Schiff takes the long view.
In fact, he says gold could go beyond $5,000, depending on how much longer money printing goes on. “A lot of people will get caught by surprise. People who buy and have the patience to hold on will be rewarded,” he said. (Read also Gold is at a critical juncture)

more... http://blogs.marketwatch.com/thetell/2013/02/13/gold-at-5000-and-beyond-peter-schiff-sticks-to-his-call/

Gold Trades Near Steady after Hitting 4-Week Low Overnight

(Kitco News) - Gold prices are trading near steady levels in the early going Tuesday, but did hit another fresh five-week low overnight. Gold has seen some intensified technical selling pressure early this week. The U.S. dollar index moving to a four-week high Tuesday is also a bearish underlying factor for the gold and silver markets. April gold last traded up $0.20 at $1,649.30 an ounce. Spot gold was last quoted up $0.30 at $1,649.00.  March Comex silver last traded steady at $30.91 an ounce.

News that North Korea has detonated another nuclear bomb underground, in defiance of United Nations sanctions, had little impact on the market place overnight. However, North Korea’s rogue status on the world stage could quickly flare up into an international incident, which would prompt investor demand for perceived safe-haven assets like gold.

http://www.forbes.com/sites/kitconews/2013/02/12/a-m-kitco-metals-roundup-gold-trades-near-steady-after-hitting-4-week-low-overnight/

James Bond's Golden Gun

Graceland Updates

By Stewart Thomson

1.     In this super-crisis, central bank interest rate & quantitative easing (QE) policies have been the main drivers of the gold price.  Many gold analysts and investors thought the bond market would crash, setting off a 1970s-style surge in gold stocks.

2.     That hasn’t happened, because the US central bank is committed to maintaining low interest rates (high bond prices), until 2015.  The financial system would close down if the bank stopped buying bonds now.  If that happened, guns would quickly replace silver, as the poor man’s gold. 

3.    The bank has committed itself to continuing QE, until the unemployment rate drops to 6.5%.  The latest jobs report showed that the unemployment rate just rose to 7.9%.  That data is going to make the Fed even more aggressive in its open market operations involving the T-bond.

4.    I refer to gold bullion as “Queen Gold”, and the US T-bond as her secret agent James T. Bond.  At some point, Sir James is going to outlive his usefulness to your queen, and a great bear market in bonds will unfold.

5.     Specifically, I believe that the pressure put on all fiat currencies by the global tidal wave of QE, will make it appear that hyperinflation is a “done deal”.  I don’t think you are going to experience full hyperinflation in this crisis, but you’ll get something very close to it.   

6.     As that happens, central banks around the world will likely begin raising rates aggressively, to combat the severe institutional loss of confidence in all fiat currencies.

7.     So, should you hold & buy gold stocks now, or wait until 2015?  The answer is that you should buy now.

8.    Why buy now?  The answer is now, because when gold first traded above $1800, institutional money managers showed strong interest in buying gold stocks.

9.     A lot has changed since 2011, when gold first went over $1800. Shinzo “Mr. Inflation” Abe has been elected in Japan.  Also, in April a new Japanese “super-dove” is likely to take the helm of their central bank.  Institutional money managers are extremely concerned that Japan’s central bank may literally be on the cusp of a money printing extravaganza.  To see the view point of one very astute money manager, please click here now.

10. What kind of institutional buying would your gold stocks experience, if gold were to surge, not just above $1800, but above $2000?  I submit that it would be very substantial.

11. With all due respect to the gold stock bears, I don’t think they really understand the fundamentals of this crisis.  Most of them are pure chartists, obsessed with a head & shoulders top shape that began forming on the HUI & GDX charts back in 2011. 

12. The main driver of your gold stock prices is not the chart shapes flaunted by gold stock haters.  It is the ever-evolving action of central bankers, in the gold bullion and T-bond markets!

13. Monday Feb 4, 2013 was a particularly painful day for gold stock holders.  Once again, bullion rallied, while junior resource stocks were hit particularly hard. 

14. Regardless, I want you to ignore that pain, and take a close look at the “Sir James T. Bond” and “Queen Gold Bullion” charts.  As you shall see, central bank liquidity flows are the bullish theme in play.  Their actions will fuel institutional buying of your stocks as gold crosses $1800. 

15. Much more institutional buying will follow as gold rises over $2000. Their buying between $1800 and $2000 will lift you, finally, out of the gold stocks gulag!

16. Please click here now.  That’s the daily T-bond chart, and you can see that it peaked in the October-November timeframe.  The bond market has been under pressure since then, while the Dow has rallied.

17. GDP growth has gone negative, and unemployment is suddenly rising. These are not events that make Mr. Bernanke enthusiastic about reducing his purchases of T-bonds in the open market.  He’s more likely to increase his purchases than reduce them. 

18. Note the 14,7,7 series of Stochastics on that bond chart, and the 4,8,9 MACD series.   The bond has stopped falling, and these indicators are turning up, nicely.

19. The action on the daily gold chart is very similar to that on the bond chart.  Please click here now.  The 4,8,9 MACD “leader” shows a crisp buy signal.  The 14,7,7 Stochastics series looks like a golden excavator bucket, ready to scoop up your gold, and place it higher on the chart!

20. Please click here now.  That’s the hourly bars chart of the T-bond. Note the head & shoulders bottom that may be forming now.  The bond spiked sharply higher yesterday, and so did gold.  With each passing day, these two key assets are tracking each other more closely.

21. The 144’12 and 146’18 price points are critical numbers, for gold stock investors.   In particular, 146’18 is arguably equivalent to $1700 gold. The T-bond seems set to spike higher, as does gold.  A move over 144’12 could take gold over the downtrend line on its daily chart, sparking waves of technical buying!

22. On your own time, please take the time to note the growing synergy of the T-bond and gold market turning points.

23. Let’s take a quick look at three MACD series on the weekly gold chart. Please click here now.  Note the crossover buy signal in play on my lead 4,8,9 series.  I expect the other two series to play “follow the leader”.  

24. Please ignore the GDX and HUI charts until the T-bond and bullion charts begin moving higher.  Then re-visit them, and I think you’ll be pleasantly surprised.  The bottom line is that February is shaping up to be a very good month, for gold stock bulls!

Special Offer For Website Readers: Please send me an email tofreereports4@gracelandupdates.com and I’ll send you my free “Start The Insanity!” gold stocks report.  I cover the entire financial crisis in a series of video reports, showing you the evolution of the crisis, and why gold stocks are in a much stronger position than any chart shows you!

Thanks!

Cheers

          St  

Stewart Thomson

Graceland Updates

Written between 4am-7am.  5-6 issues per week.  Emailed at aprox 9am daily.

www.gracelandupdates.com

Email: stewart@gracelandupdates.com