-- Posted Friday, 17 May 2013 | | Disqus
GOLD PRICES failed to hold a rally above$1380 per ounce in London on Friday morning, trading 5% down for the week as worldstock markets held steady.
Both the Euro and British Pound also cuttheir mid-week rallies against the Dollar, holding gold prices at €1070 and £904per ounce respectively.
New data overnight showed Japanese machineorders leaping 14% in March from February, while China's leading economic indexrose slightly for last month.
Eurozone construction output sank 8% in Marchfrom a year earlier.
"A spell of Dollar weakness looks likegold's only salvation at the moment," says one wholesale dealer in a note.
"So another disappointing data pointcould encourage more short-covering [when bearish traders close their position]ahead of the weekend."
The US Dollar crept towards a 10-month highvs. a basket of major currencies this morning.
US consumer sentiment data were due for releaseFriday at 09.55 New York time.
"Bullion's price break below the psychological$1400 an ounce level may introduce additional near-term pressure on gold,"says bullion market-maker HSBC's James Steel.
"However, physical demand is likelyto pick up further given the price drop, to help stem potential losses."
Over in India – the world's biggest goldbuying nation on an annual basis – "There is no supply,"Reuters today quotes Prithviraj Kothari, head of Mumbai importers Riddhi SiddhiBullions Ltd.
Thanks to this week's sudden imposition of Indiangold import restrictions, supply is so tight somedistributors are charging up to $20 an ounce above international benchmark Londonprices, Kothari says.
Hong Kong premiums have jumped this weekto record highs of $5 per ounce, with the kilogram gold bars favored by China'sinvestment market now "hard to come by" according to one Singapore dealer.
Even so, "Many people are waiting onthe sidelines," reckons Singapore dealer Brian Lan at GoldSilver Central Pte,"as they are expecting another drop" in globalgold prices.
Amongst Western money managers, "We'reseeing some of the pension funds selling via the
ETFs," reckons analyst Daniel Smith at Standard Chartered bank, "whichis a bit of a worrying sign."
Exchange-traded trust funds backed by goldshed yet more metal on Thursday, with the two leading US funds – the GLD and IAU– dropping 7 tonnes between them to reach the lowest combined level since April2010 at 1,233 tonnes.
Since Dec. 2012's all-time peak, the GLDand IAU have lost 21.4% of their combined gold ETF holdings.
"The price of silver in 2013 will primarilybe determined on the demand side," says the latest Commodities Weekly from French investment bank and London bulliondealer Natixis, forecasting "relatively stable" supply with a slight dipin recycling.
On the industrial side it says, and "despitepromising expectations from the rest of the world, we expect a slight drop in [photovoltaic] installations due to weak European [solar panel] demand" thanks bothto low subsidies from government and the continued Eurozone crisis.
Silver ETF holdings have yet to follow goldtrust funds sharply lower, Natixis notes – primarily because private investors ownthe former, as opposed to money managers in gold.
"[But] at some point these retail investorsare likely to start selling."
Total silver ETF. holdings of 19,400 tonnescurrently equate to 60% of last year's total market supply, the bank's analysisadds, and "an outflow...could introduce substantial downside risks for silverprices."
Adrian Ash
Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.
(c) BullionVault 2013
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-- Posted Friday, 17 May 2013 | Digg This Article
| Source: GoldSeek.com
