(IBTimes) - Gold's London AM fix this morning was USD
1,563.00, EUR 1,213.79 and GBP 972.62 per ounce.
Friday's AM fix was USD 1,580.75, EUR 1,221.69 and GBP 980.98
Gold fell $12.70 to close at $1,581/oz in New York on Friday.
Gold has fallen again today and has now erased the gains for the
year. Gold edged up in early Asian trading as bargain hunters
lifted prices from four month lows, but gains were capped and
prices gradually fell and falls continued in European
Cross Currency Table - (Bloomberg)
Support is at $1,550/oz and a close below that level could see
gold test strong support at $1,523/oz and $1,533/oz - the lows in
December and September 2011 respectively.
Greece looks certain to leave the single currency - something
that was denied could ever happen by policy makers, central
bankers etc. for many months. A Greek exit from the eurozone
would damage confidence in the single currency bloc but not
necessarily be 'fatal', Irish central bank chief and ECB
policymaker Patrick Honohan said over the weekend.
"Things can happen that are not necessarily imagined in the
treaties... it is not necessarily fatal but it is not
attractive", Honohan said.
For Greeks who have left their life savings in euros in Greek
banks it might prove fatal to their finances as capital controls
are suddenly introduced and their savings are forcibly converted
to the Greek drachma overnight. It is estimated that the drachma
could quickly devalue by between 20% and 50%.
Spanish 10-year bond yields have surged to over 6.29% leading
to concerns of contagion which is leading to sell offs in most
markets including gold. However, gold's recent correlation with
risk assets will again be short term and buyers should again
focus on the long term and gold's proven long term
diversification, wealth preservation and safe haven
While gold is now negative year to date in dollar terms, it
remains 0.7% higher in euro terms. This shows that recent gold
weakness is primarily due to the recent bout of dollar
Gold in USD - Daily (1 Year)
Money managers in gold futures and options have cut their net
long positions by 20%, CFTC data showed Friday. The plunge
means that bullish gold bets are at their lowest level since
December 2008 (92,498 contracts), as speculators aggressively
unwound their bullish bets in the precious metal after recent
Gold in Euros - Daily (1 Year)
Bullish silver bets on a silver rally tumbled 32% to 7,159,
the biggest decline since late December. This is bullish from a
In the physical market, jewellery makers and speculators took
advantage of last week's drop in prices according to Reuters and
there are reports of physical buying interest and indeed "tight
supplies" in the physical market.
Gold prices dropped 3.7% last week and silver fell 5.1% to
$28.89/oz. The smart money, especially in Asia, is again
accumulating on the dip.
Demand for jewellery and bullion in India has dipped in recent
weeks but should resume on this dip - especially with inflation
in India still very high at 7.23%.
Also of interest in India is the fact that investment demand
has remained robust and gold ETF holdings in India are soon to
reach the $2 billion mark.
Gold in GBP - Daily (1 Year)
Morgan Stanley has said in a report that gold's bull market
isn't over despite the recent price falls.
Morgan Stanley remains bullish on gold as it says that the ECB
will take steps to shore up bank balance sheets, U.S. real
interest rates are still negative, investors have held on to most
of their exchange traded gold and central banks are still buying
Weak hands are again being shook out of the gold market but it
remains prudent to retain an allocation to gold and those who do
so will be handsomely rewarded in the coming months and
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