Gold Settles Up at $1,622, Set for Third-Quarter Gain

By: Reuters

Gold rose Friday on lingering worries of a global economic slowdown, and the price of bullion notched its biggest quarterly gain of this year even after a sharp pullback from a record hit this month.

Jose Luis Pelaez | Iconica | Getty Images

Gold posted a quarterly gain of 8 percent—its biggest this year, despite a drop of 11 percent for September—its largely monthly decline in three years.

For the day, gold finished higher as safe-haven buying resumed despite a rising dollar. Equities and industrial commodities fell after data showed manufacturing in China contracted for a third consecutive month in September.

"I think the correction  has run its course. For the first time in quite some time, we actually bought some gold and platinum exchange-traded funds  today," said James Dailey, portfolio manager of the TEAM Financial Asset Management.

Spot gold [XAU=  1622.95  ---  UNCH    ] was up 0.5 percent at $1,623.10 an ounce.

U.S. gold futures for December delivery [GCCV1  1622.30    5.00  (+0.31%)   ]settled up 30 cents at $1,622.30 an ounce, with trading volume sharply below this week's average as some bullion traders were away for the Jewish New Year holiday.

RELATED LINKS

• Gold in Major Trend Change: Charts
• Gold ETF Investors Hold On in 'Dash for Cash'
• Gold to Bottom Out This Week: Experts

Gold, which fell this month during a broad sell-off of riskier assets as investors worried about euro zone debt  and a sluggish U.S. economy, remained 15 percent below its record of $1,920.30 an ounce set Sept. 6.

Trade has been extremely volatile this month. The wide $400 trading range after the record on Sept. 6 has kept investors wary even as the correction from that high has lifted physical demand.

"In markets that have been shaken as badly as gold market has been shaken, it will take days, perhaps even weeks, before the bullish trend clearly reasserts itself, but we do believe that the margin clerk liquidation has probably run its course," said independent investor Dennis Gartman.

In the last two weeks, gold had one of its steepest corrections in history, weighed down by a sharp margin increase, the fourth hike this year and heavy liquidation by hedge funds  in a technically overbought market.

Open interest in COMEXgold futures fell to a two-year low on Thursday, indicating liquidation by momentum traders and speculators.

COMEX gold open interest, a gauge of overall investor sentiment, fell by more than 5 million ounces or over $8 billion at current prices in the past nine sessions.

ETF Investors Hold Firm

Holdings of SPDR Gold Trust, the world's biggest gold-backed exchange fund, dipped by 10 tonnes, but were almost unchanged month-on-month despite the fluctuations in gold prices.

Demand for physical gold kept supporting the market, with the advent of the Indian festival season helping drive buying in the world's biggest gold consumer.

In the official sector, central banks added to gold reserves in August, with Thailand buying 9.3 tons last month, Russia adding 5.6 tons and Bolivia buying 7 tons of gold, International Monetary Fund data showed.

Silver [XAG=  29.90  ---  UNCH    ] was down 2.4 percent at $29.83 an ounce. Holdings of the largest silver ETF, the iShares Silver Trust [SLV  28.91    -1.05  (-3.5%)   ], fell nearly 23 tons on Thursday.

Silver prices have also seen extreme volatility this month, in line with gold, and are set to end the month 27 percent lower, and the quarter down 13 percent.

Spot platinum [XPT=  1520.20  ---  UNCH    ] was down 0.1 percent at $1,515.74 an ounce, while spot palladium [XPD=  609.78  ---  UNCH    ] was down 1.7 percent at $605.13 an ounce.

Copyright 2011 Thomson Reuters. Click for restrictions.

Silver prices may decline to $25-23 on industrial contraction

By Bitupan Majumdar
Silver prices may see further declines to levels around $25 -$23 on contraction of industrial sector. Almost 80% of Silver is used for industrial purpose while only 15% is for investment demand. Gold prices are likely to see small correction on fear of a banking crisis in the Euro zone that may cause liquidity crunch. However, gold remains attractive for long term investment.

Owing to weak demand outlook due to global economic slowdown, metals and energy prices may come under pressure. Copper which is trading far above its marginal cost of production may prone to further declines such as $6500 to $6000 per tons October. Nickel is likely to remain depressed on slowing consumption of stain less Steel in China. Zinc which is expected to last the surplus trend till 2012 may remain depressed in the short term. Bank financing deals which hold almost 60% of Zinc stored in LME warehouse may not attribute any major support when panic grips the market.

It was another month of selling in markets where almost all asset classes were under pressure. Commodities plunged across the board on Greece Default fear which is likely to cause a banking crisis in France, Germany and Italy. Three major global financial powerhouse BNP paribus, Societie General and Commerzbank are holding estimates $14.5 billion of Greece sovereign debt. Italy’s largest insurance company Generali is holding almost $4 billion. Apart from that, holdings by IMF, European Union Loans, Eurosystem SMP and European Central bank are estimated around $150 billion.

The political rift between Euro zone member countries to provide additional loan to Greece is subjected to major concern which has pulled down all major asset classes globally along with high yielding currencies. The interest rate on Greek three-year government debt recently soared past 100% and the yield on 10-year bonds reached 22%. The Hellenic government needs to escape from it an otherwise it will be an impossible situation. Its debt is 150 % of GDP, rising by 10 % this year. GDP falling by more than 7% this year, pushing the unemployment rate up to 16%. The balance-of-payments deficit is around 8 % of GDP and banks are rapidly losing deposits. The only way out is the country to default on its sovereign debt. It must write down the principal value of that debt by at least 50%.

The current plan to reduce the present value of privately held bonds by 20% is just a first small step towards this outcome. On Greece default, pressure will mount on other PIIGS nations i.e. Portugal, Italy, Ireland and Spain. It may push up sovereign yield of these countries and in such a scenario Portugal; Ireland will have to go for assistance from EU-IMF.

EU fear Lead sells off in commodities. Gold regarded as a safe haven saw panic selling and long liquidation with prices falling almost $400 from the historic high. Silver prices shed 25% in just two days, base metals continued to fall with Copper leading the row now.

Its seems nothing is right to place a bet on buy side as the world is heading towards a double dip recession. The “V” shaped recovery is fading out – the recent slowdown in manufacturing and services in Europe, US and China shows we are heading towards a 2008 kind situation or may be worse. The depth is still unknown but a series of default by south European Nations may make the situation worse than the last decade recession.

Apart from Euro zone, a slowdown in the Chinese economy and recession in the US may result in slowdown of demand for Crude Oil and industrial metals. US economy is no doubt is heading towards a double dip and may confirm by Q1 2012.

The Chinese economy which has been a major contributor for global economic recovery after the sub –prime crisis is also slowing down. As per a poll conducted by Bloomberg, market believes that Chinese economic growth may drop below 5% by 2016. China, which saw its exports tumble the most since at least 1979 amid the 2008-09 global crisis may not be able to rely on trade in any prolonged demand slump in Europe and the U.S, a recently released data showed, China's factory sector contracted for a third consecutive month in September as flagging overseas demand put the brakes on new orders.

The HSBC flash Purchasing Managers' Index dipped to 49.4 in September from August's final reading of 49.9 and hovered below the 50-point mark for the third straight month. China's industry sector, which includes manufacturing and resource exploration, accounts for about 40% of the country's GDP. (The author is Senior Research Analyst, Commodities and Currencies, JRG Securities Limited)

Print

Gold Holds Gains; Heads for Worst Month Since 2008

By: Reuters

Gold ticked up on Friday, having gained in the previous session on German approval of a stronger bailout fund to counter the euro zone debt crisis, but the metal was heading for its worst monthly decline in three years. 

Jose Luis Pelaez | Iconica | Getty Images

Spot gold [XAU=  1626.6899    12.64  (+0.78%)   ]added $7.79 an ounce to $1,621.84 an ounce by 0043 GMT. Despite the gain, prices were headed for of 11 percent, their worst since October 2008 when they tumbled 17 percent following the collapse of Lehman Brothers.

Gold rallied to a lifetime high around $1,920 an ounce in early September. 

U.S. gold [GCCV1=  Unavailable      ()   ] rose $7.2 an ounce to $1,624.50 an ounce. 

German Chancellor Angela Merkel won a vote on enhancing the euro zone's bailout fund without needing to rely on the opposition, a senior member of Merkel's CDU party said on Thursday.

The euro clung to modest gains in Asia on Friday, following a brief boost after Germany approved an expansion of the euro zone bailout fund, but investors remain worried due to the many hurdles ahead of a workable resolution to the European crisis.

RELATED LINKS

• Gold in Major Trend Change: Charts
• Gold ETF Investors Hold On in 'Dash for Cash'
• Gold to Bottom Out This Week: Experts

The Nikkei share average was flat on Friday, wavering in and out of positive territory in the first minutes of trading as investors took profits after a late surge in the previous session, and was on track to gain for the week.

U.S. crude futures extended gains on Friday, as the German vote to beef up the euro zone rescue fund and upbeat U.S. economic data eased market worries over a slowing global economy.

Copyright 2011 Thomson Reuters. Click for restrictions.

Gold Falls 1% on Rising Dollar, Growth Fears

By: Reuters

Gold extended losses and dropped more than 1 percent on Thursday as investors turned to the safety of the U.S. dollar on uncertainty about a resolution of Europe's debt crisis that has stirred up fears for global growth. 
    

Don Farrall | Getty Images

Stocks fell in Asia, copper futures dropped more than 5 percent and oil slid more than $1 on mounting worries that Europe's debt problems will plunge the world economy into a second financial tailspin. 
   
Spot gold [XAU=  1617.10    9.20  (+0.57%)   ] lost $3.55 an ounce to $1,604.35 by 0221 GMT, having fallen to a low around $1,582. It had plunged to a two-month low of $1,534.49 on Monday -- down from a lifetime high around $1,920 an ounce struck in early September.   
   
"The dollar is likely to strengthen on a broad scale, at least short-term. That's definitely going to be weighing on performance. Closer to the 200-day daily moving average, we should find the bottom and I think that's still there," said Dominic Schnider, an analyst at UBS Wealth Management. 
   
"But I am confident that with lower prices, you are going to see very strong jewelry offtake, especially as we head towards Diwali on October 26," said Schnider, referring to the Hindu festival of lights in main gold consumer India. 
  
U.S. gold futures [GCCV1  1616.90    -1.20  (-0.07%)   ] fell $9.4 to $1,608.7 an ounce.
   
The uncertainties about global economic growth, mainly   sparked by the lack of consensus on a lasting solution to the   euro zone debt crisis, have driven gold prices to record highs since July.   
   
But declines in other markets prompted speculators to cash in to cover losses, and investors were spooked by a revolt within the government of German Chancellor Angela Merkel ahead of a vote to expand Europe's bailout fund on Thursday.

The euro was under modest pressure in Asia on Thursday on profit taking and squaring of positions following a large three-day rally, with investors still worried about the European debt  crisis ahead of the vote in Germany.
   
Lower gold prices stirred up buying in Asia, sending premiums for gold bars to their strongest since at least February in Singapore and Hong Kong. In India, the premiums jumped to their highest in a year.

RELATED LINKS

• Gold in Major Trend Change: Charts
• Gold ETF Investors Hold On in 'Dash for Cash'
• Gold Could Fall to $1,100: Faber

   
Traditionally in India, retail gold demand gains pace from the month of August when the festival and wedding seasons start, culminating with the Diwali.   
  
Gold jewelry is an essential part of the dowry basket that Indian parents give their daughters at weddings. 
   
"Physical demand is still there. Everyone in Asia is buying. Everybody is buying gold and they want delivery," said a physical dealer in Singapore. 
   
"We have stocks of gold bars, but it's not enough to satisfy demand," said the dealer, adding that buyers came from India, Singapore, Indonesia and Thailand. 
   
Gold's steep correction, however, has not yet unnerved investors in the No. 1 gold exchange-traded fund, SPDR Gold Trust.  
   
Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust [GLD  156.22    -4.41  (-2.75%)   ], and that of the largest silver-backed ETF, New York's iShares Silver Trust [SLV  28.87    -2.30  (-7.38%)   ] remained unchanged on Wednesday from Tuesday.

Copyright 2011 Thomson Reuters. Click for restrictions.

Happy vijaya dasami to all reader and trader have happy trade

Gold Falls as Investors Turn to U.S. Dollar

By: Reuters

Gold fell on Wednesday, after its first rebound in five days the previous day, as investors flocked to the U.S. dollar for safety as doubts flickered over European nations' commitment to a plan to recapitalize the region's banks. 
  

altrendo images | Getty Images

Spot gold [XAU=  1644.09    -4.81  (-0.29%)   ] fell 0.5 percent to $1,641.19 an ounce at 0030 GMT, down for a fifth day in sixth.

U.S. gold [GCCV1  1646.00    -6.50  (-0.39%)   ]declined 0.5 percent to $1,643.90, headed for its 12th straight quarter of gains. 

Reports showed European officials considering plans to make the region's bailout fund many times larger and to recapitalize banks.

The dollar index [.DXY  77.83    0.33  (+0.43%)   ] increased 0.4 percent to 77.821, after two days of declines. A stronger dollar makes purchases of dollar-denominated commodities less attractive for investors holding other currencies.

RELATED LINKS

• Gold Tumbles Below $1,600 as Investors Flock to Cash
• Gold Likely to Retest $1,920: Charts
• Gold's Key Support Level is $1545: Charts

U.S. stocks rose for a third straight day on Tuesday on hopes European leaders will beef up the euro zone's rescue fund and tackle the region's debt crisis. 

The Dow Jones industrial average [.DJI 11190.69    146.83  (+1.33%)   ] closed up 1.33 percent at 11,190.69 on Tuesday. The Standard & Poor's 500 Index [.SPX 1175.38    12.43  (+1.07%)   ] rose 12.43 points, or 1.07 percent, at 1,175.38.  

Oil lost more than $1 a barrel to $83.36 in early Asian trade on Wednesday as the U.S. dollar gained, making the dollar-denominated asset more expensive.London Brent crude [LCOCV1  106.22    -0.92  (-0.86%)   ] lost 72 cents to $106.42 a barrel. 

The euro consolidated gains in Asia on Wednesday as investors clung to hopes European leaders were making progress on a major debt deal, even if it was behind the scenes, though a late pullback on Wall Street could augur a choppy session.

Copyright 2011 Thomson Reuters. Click for restrictions.

Technical 28 sep afternoon

GOLD (Spot) intraday: caution.

Pivot: 1624.00 Our Preference: LONG positions above 1624 with 1672 & 1690 as next targets. Alternative scenario: The downside penetration of 1624 will call for 1585 & 1530. Comment: the RSI is mixed and calls for caution.