Gold Fixes/ Rates/ Volumes - Bloomberg
Gold is mixed in various currencies but popped nearly $15
after the Chinese announcement that they would be lowering their
bank reserve ratio. It shows the world's second largest economy
is swinging into easing mode which is not a good sign.
Hua Zhongwei, analyst at Huachuang Securities, Beijing: "It's
the start of a relaxation cycle, and the central bank is expected
to take more steps ... the economic slowdown is there, and
capital inflows are set to fall further, and many banks are
finding liquidity shortages."
Gold's fundamentals remain very sound due to strong broad
based global demand and gold looks oversold technically.
Gold continues to consolidate, after its recent correction,
below its 100 day moving average which appears to be acting as
resistance for the moment.
The London AM and PM Gold Fix (
) of the last two days in a row have been identical - to the cent
- which is highly unusual.
View data from LBMA Website.
On Monday and Tuesday, the 28th and the 29th of November, the
gold fix was identical in dollar terms and nearly identical in
pound and euro terms.
On Monday, the 28th, gold's AM and PM fix was at
On Tuesday, the 29th, gold's AM and PM fix was at $1,717.00/oz
- exactly just $3.00 higher than the day before.
It may be a coincidence but if it is one, it is highly unusual
as it happens rarely.
While it has happened twice in 2011 - on January 10th and
February 2nd - it has never happened two days in a row. It
happened six times in 2010 but again never for two days in a
Should it happen a third day in a row today - then questions
will be asked as to whether the official sector and or bullion
banks are attempting to fix prices at this level.
This was attempted by the London Gold Pool in the 1960's when
the Federal Reserve and seven European central banks capped and
artificially suppressed the price of gold for a few years before
the controls collapsed in 1968 due to free market realities.
Gold rose 24 times in the next decade from $35/oz in 1971 to
$850/oz in 1980.
Obviously, there is a motivation for attempting to cap gold
prices due to a real risk of an international monetary crisis due
to the growing European and global debt crisis - not to mention
an increasingly likely European currency crisis.
It is too soon to jump to conclusions and judgment must be
suspended for now.
It will be interesting to see what happens on the London PM
Fix at 1500 GMT today.
Cross Currency Rates - Bloomberg
Morgan Stanley has said it prefers exposure to gold, silver
and livestock in the coming year, as such commodities perform
well in a global economic slowdown.
Gold, silver and livestock are the most preferred commodities
while base metals and crude oil are the least, the bank
The defensive nature of gold, and silver to a lesser degree,
will create significant investment demand as investors look for
safe havens in a period of risk aversion.
Amanda Cooper in the Reuters Global Gold Forum reported on
gold options positioning.
The shift in overnight open interest on the most-active
contracts has been mostly in favour of upside calls, with strikes
above $2000 generally seeing more increases in OI.
The largest change in overnight open interest on Feb options
surfaced in $1950C, which rose 898 lots to 4,178 contracts,
followed by $1750C, where OI rose 410 lots to 4,437. In the
larger strikes, the most noticeable change was in $1800C, where
OI fell 611 lots to 5,917 and in $2100C (-193 lots to
For April options, the most significant change in OI filtered
through into $1200P (+201 to 1,556), $2300C (+105 to 3,360) and
$2200C (+100 to 5,011). Overall, the top three strikes by open
interest remain the same: $2000C, $2500C and $1800C.
In December 2012, there was only very marginal changes in OI,
leaving the ranking of the top three strikes unchanged at $3000C,
$2000C and $2500C.
Finally, Amanda reminds us of the put/call split for 2012 gold
options. Calls are heavily favoured on all most-active contracts,
with April calls outnumbering puts by around 3:1 (see chart
Britain has evacuated all its diplomatic staff from Iran,
Western diplomatic sources told Reuters on Wednesday.
Geopolitical risk remains elevated but is being ignored by
markets for now.