Gold Market To Focus On Central Bank Meetings, Jobs Report, Physical Demand...

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Gold traders will have plenty on their plate next week with central-bank meetings and an always-important U.S. employment report, while also continuing to keep tabs on the strength of demand in the physical market.

The U.S. Federal Open Market Committee and European Central Bank meet. And, as always, traders will be watching economic data to see whether conditions are improving or deteriorating so they can gauge for themselves what officials may do with monetary policy down the road.

Traders also will keep monitoring reports about the voracious physical buying that was unleashed by a sharp price decline in mid-April. Some analysts have described this as pent-up demand in which buyers pounced when presented with lower prices. This helped gold price rise for the week.

“The key for me is I want to see on these accelerated prices if that physical buying is going to continue, or if it’s price sensitive and is going to subside,” said Kevin Grady, president of Phoenix Futures and Options.

June gold finished with a gain for the week of $58, or 4.2%, to $1,453.60 an ounce on the Comex division of the New York Mercantile Exchange, helped by bargain hunting, particularly as the market took notice of the strong physical buying. The technical-chart posture also improved. In fact, the June contract has now risen in seven of the nine sessions since the historic sell-off of more than $200 an ounce earlier this month. May silver gained 79.8 cents for the week, or 3.5%, to settle at $23.758.
In the weekly Kitco News Gold Survey, out of 35 participants, 24 responded this week. Fourteen see prices up, while eight see prices down, and two see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

The FOMC meets on Tuesday and Wednesday. When gold first faltered early in the year, improving economic conditions had many financial-market participants thinking about an eventual FOMC withdrawal of the bond-buying program meant to push down long-term interest rates, referred to as quantitative easing. But much of the economic data for March was softer than expected, which, if it continues, likely would mean increased expectations for continued QE.

The soft March U.S. data included a rise of just 88,000 in non-farm payrolls and 0.4% decline in retail sales. A report on Friday showed the U.S. economy grew 2.5% in the first quarter, below forecasts mostly around 2.9% to 3%.

Traders will find on May 3 out if the labor market has picked up, when the Labor Department releases the April report. Consensus forecasts call for a rise of around 160,000 to 166,000 in non-farm payrolls, with the jobless rate expected to remain at 7.6%.

“The last time, we expected 195,000 new jobs and it was only 88,000,” Grady said. “So the jobs number is going to be paramount.”Some of the other key U.S. economic indicators next week include personal income and spending Monday, Chicago Purchasing Managers Index and consumer confidence on Tuesday, ADP private-sector employment report and Institute for Supply Management manufacturing PMI Wednesday, and initial jobless claims Thursday.

Meanwhile, the European Central Bank’s governing council meets Thursday. Recently disappointing economic news in the 17-nation eurozone fueled expectations that the bank may cut interest rates further from the record low of 0.75%. If so, this could pressure the euro, which could impact gold due to its inverse correlation with the U.S. dollar.

“After the disappointing string of economic data over the past couple of weeks, the conditions set out by the ECB for a further easing in rates have likely been fulfilled,” said Alex Thorndike, senior trader for precious metals and foreign exchange with MKS Capital. “Many economists have now changed their tune from earlier in the year expecting a 25(-basis-point) cut in the main refinancing rate at the May meeting, but no change to the deposit rate.”

Meanwhile, traders will also keep tabs on the physical market. Demand for coins and bars worldwide has soared since the mid-April price plunge, which has helped unleash demand, a number of analysts have said. U.S. Mint gold bullion coin sales have hit 203,500 so far in April, the most of any month since December 2009.

“The reaction of the people (to the gold sell-off) was to start buying,” said Chris Blasi, CEO of Neptune Global Holdings. “The fundamentals of gold and silver haven’t changed. The global economy is still weak; banks are still printing money. The break gave people a chance to add to their positions. Now as gold climbs, you might start to see the momentum traders come in, which helps gold go higher.
“If we see a pullback, people who were buying before might come back in and buy again to buy it cheaper.

The only thing that might be not so good for gold is if prices went flat. There are some people…who are waiting for a pullback. They’ve put half their money in, but are holding back for a $25, $30, $50 break. If we do pull back to the lows from last Tuesday (the $1,321 area), it’s going to be less shocking. When prices fell as hard as they did at the time, it was shocking.”
The mid-April price decline also came at a key period for seasonal demand due to spring weddings in India, as well as the May 13 Akshaya Tritiya festival, auspicious for gold buying. Buying surged there and in other emerging-market nations.

However, some observers also caution that a three-day holiday in China next week could at least temporarily curb some of the global buying. China is the world’s second-largest consuming nation, behind India, according to World Gold Council data.

“What I would be a little wary of is when they do go on holiday, a significant amount of demand will be pulled from the market and could induce bigger players to step in and sell,” Thorndike said. “Without the cushion of SGE (Shanghai Gold Exchange)/Chinese demand, we could swoop lower.”
Traders will also look closely at the most recent release of the Commodity Futures Trading Commission’s weekly commitments of traders data, said Bob Haberkorn, senior commodities broker with RJO Futures. The report is released late on Fridays and shows how speculators are positioned as of the previous Tuesday. Should the data show fresh buyers returning to the market, this would be a bullish sign, he said.

“Are there new longs coming into the market?” he asked rhetorically. “Is this (recent rally) a short-covering move? It could be a combination of both.”As always, technically oriented factors could accelerate any moves.

"I think we're going to consolidate next week,” said Charles Nedoss, senior market strategist with Kingsview Financial. “It closed nicely over the 10-day (moving average) and consolidated there. It got a little ahead of itself at the 20-day (moving average).”
As of the Comex pit-session close, the 10-day average for June gold stood at $1,408.90 an ounce, while the 20-day was at $1,486.60.

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News Source: www.cnbc.com

Chemical Weapons In Syria Push Up Crude Oil Prices...

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WTI crude oil futures were trading slightly higher tracking a similar movement in benchmark NYMEX contracts. The US dollar has fallen from its highs in the low 83.00 price range to trade at 82.72 this morning, making dollar denominated commodities like crude oil cheaper. In the international market, crude oil futures edged higher due to a weak dollar against the euro and lower than-expected rise in the US crude oil stocks.

US crude oil inventory rose by 900,000 barrels from the previous week to 388.6 mln barrels in the week ended Apr 19, against market projection of 1.2 mln barrels rise. Crude is trading at 93.20 giving back 43 cents as traders took advantage of the climb over 93.00 to book profits.

Crude oil prices settled at two-week highs on concerns over tightening supplies, while U.S. gasoline demand heats up ahead of the peak spring-summer driving season. Traders said weakness in the dollar, rising equities prices and news that U.S. weekly claims for jobless benefits fell to the lowest level in nearly five years added to buying interest. Data showed a sharp fall in the U.S. jobless claims last week. The initial claims for jobless benefits was 339,000 in the week ending April 20, down16,000 from the revised figure of 355,000 in the previous week, the U.S. Labor Department reported yesterday. Meanwhile, the four-week moving average, which helps smooth out week-to-week volatility, edged down to 357,500 from 362,000 in the previous week. Recent job data signaled an improving labor market, but still not strong enough to significantly cut the unemployment. The U.S. unemployment rate dropped to 7.6% in March.

Prices also got support from the reports over Syria’s possible use of chemical weapons stirred concerns over stability in the Gulf region. Oil prices jumped after the United States said Syrian government forces had likely used chemical weapons, raising worries that Washington would punish Damascus militarily. US officials said cautiously for the first time that they had evidence of the use of chemical weapons by the Syrian regime. This report was supported independently by France and Israel.
They stressed there was still not full agreement on the issue in the US intelligence community, but US Defense Secretary Chuck Hagel, speaking in Abu Dhabi, warned that use of such weapons “violates every convention of warfare.”

The report raised fears that Washington could intervene more deeply in the Syrian conflict, after having warned earlier that using such weapons would cross a “red line” in President Bashar al-Assad’s fight with rebels. A senior White House official said “all options are on the table” should use of the weapons be confirmed, a euphemism for military options being taken into consideration. But a US defense official stressed that a military intervention was not imminent.

Implied demand for gasoline–the most widely used petroleum product in the world’s biggest oil consumer–climbed to its highest level since November last week, U.S. government data showed. Gasoline stockpiles logged their biggest drop in a year, breathing new life into futures contracts that fell to a four-month low in recent days.

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News Source: www.marketwatch.com

Gold futures jump with physical demand on the rise...

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Gold futures rose more than 1% on Wednesday as bargain hunters waded into the beaten-down market, lifting physical demand for the metal on the back of fresh data pointing to difficulties for the U.S. economy.

 Gold for June delivery GCM3 +0.89%  climbed $15.10, or 1.1%, to $1,423.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices were poised to recover the loss of $12.40, or 0.9%, they saw a day earlier.

The fall on Tuesday was gold’s first in four sessions, with prices for the precious metal hurt after disappointing data on manufacturing data in China,a rally in equities and a stronger U.S. dollar.

Orders for U.S. durable goods fell by a seasonally adjusted 5.7% in March, more than the 3.2% decline expected by economists polled by Market Watch.

If the economic data releases covering April are similar to the month prior, then the Federal Reserve isn’t likely to give any signs of an early withdrawal of quantitative easing, said Chintan Karnani, independent bullion analyst based in New Delhi. QE has been a supportive factor for gold, as it can lead to inflation and gold is often seen as a hedge against inflation.

Bargain buys

Traders and investors are stepping in to buy the recent big dip in prices, said Jim Wyckoff, senior analyst at wsj.com in a daily market note. “Demand for physical gold world-wide remains strong after last week’s price plunge.” Read about why investors should be bullish on gold price as long as chaos reigns.

Gold prices are on track for a roughly 11% drop this month, and analysts have been pointing to declines in the metal’s holdings among exchange-traded funds and lower gold-price forecasts as factors behind the recent selloff.          

Goldman Sachs on Tuesday closed its recommendation for clients to “short” gold, telling them to exit out of those bets on lower gold prices. The investment bank on April 10 cut its short- and long-term gold forecasts as prices approached bear-market territory.“Strong demand for physical gold world-wide, and especially from Asia, continues to underpin the gold market,” said Wyckoff.

The U.S. Mint this week stopped sales of its smallest-denomination gold bullion coins as demand reduced government inventories.

Year to date, demand for the one-tenth ounce coins are up more than 118% compared with the same time a year ago, the U.S. Mint said in a memo to authorized purchasers, according to The Wall Street Journal.

Other reports this week have said there are shortages of gold bars and coins in some countries, with gold retailers jacking up their charged premiums over the spot price of gold, Wyckoff said.      

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News Source: www.wsj.com

                      

Gold Is Undervalued in Fiat Money Terms...

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The question on everyone's mind is whether or not the gold bull market is over? Such an utterance seems glib in the face of 8,000 years of history that suggests otherwise. Of course, there is a time and moment to own gold. That time is still now. So you will not be surprised to hear us say, no it's not over; it's just getting interesting.

Another question that is on everyone's minds -- or if it isn't, should be -- is, was the gold market sell-off a product of continued and escalating manipulation?

I will explore the answers to both these questions, and by understanding reality we can begin to understand whether gold can reassert itself in its justifiable role as an antidote to the current fiat currency system.

Is Gold Currently Undervalued?
First off to state publicly, gold is still undervalued in 'fiat money' terms, that's the easy question to answer.People have said to me gold has gone up a lot, and so now it's too high. I always reply that gold has a price and a value. These two constructs are not interchangeable. Price is a level at which you make an exchange, and value is whether it is worth it. Right now gold remains undervalued when examined in the context of other assets, primarily against paper money.

To illustrate this point we can now see how gold is as undervalued, incredibly, as it was in 2000, just before this gold market began to rise in nominal terms.

One phrase that sums up my thinking – price has changed, but nothing has changed.
To develop this statement a little further, I want to quote a friend, Detlev Schlichter, on the recent brutal bloodletting in the gold market. Detlev wrote a really eloquent book Paper Money Collapse, about the inevitable failure of paper money economies. He states:

"After 40 years of relentless paper money expansion and in particular 25 years of Fed-led global bubble finance, the dislocations in the global financial system are so massive that nobody in power dares to turn off the monetary spigot and allow market forces to do their work, that is to price credit and to price risk according to the available pool of real savings and the potential for real income generation rather than according to the wishes of our master monetary planners."
This fact remains, so nothing has changed.

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A Make or Break Week Ahead for the Stock Market...

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  It's make-or-break time for the first-quarter earnings season, and it comes just as the stock market is showing signs of strain.About 170 S&P 500 and 10 Dow companies report earnings in the week ahead, and they include everything from tech icon Apple to industrial names like Caterpillar and energy companies like giant Exxon. As of Friday, a fifth of the S&P 500 had reported, and two-thirds had better-than-expected earnings. But an unusually high amount—57 percent—missed their top-line revenue estimates, according to Thomson Reuters.

That's a cause for concern, since stocks traded in one of the most volatile seesaw patterns of the year in the past week, as worries about global growth increased amid a dramatic sell-off in commodities. The Dow finished its worst week this year 2.1 percent lower at 14,547, and the S&P 500 was down 2.1 percent at 1,555. The Nasdaq was down 2.7 percent for the week, even with Friday's big gain of 1.3 percent on the back of a tech rally.


The week ahead also has a light but important economic calendar, including home sales data Monday and Tuesday, durable goods Wednesday, and the first look at first-quarter GDP Friday. Even though it is a reading of past activity, first-quarter GDP is important since, at estimated 3 percent growth, the rate is about double what is expected for the current quarter. Traders have also been fixated on events surrounding the Boston Marathon bombers, though it was not seen as a market factor.

"I think this rally is a little weary," said Art Cashin, director of floor operations at UBS. "The 'buy the dips' have been in and they bought most of the dips. The question is will they continue, or is the market getting ready for the spring swoon everyone is talking about."


Cashin said the Dow broke an important trend line at 14,500 Friday as IBM had its worst day in eight years, but it rose back above that level by the end of the day. The S&P struggled at its 50-day moving average Thursday, but it too got about a dozen points above it by Friday afternoon. Commodities markets were calmer by the end of the week, but gold lost 7 percent in the past week, sliver lost 12.8 percent, copper lost 6 percent and oil lost 3.6 percent.


"By any sort of measure, we're kind of overdue for some sort of a pullback, and maybe we're finally going to get it," said Bill Stone, chief investment strategist at PNC Wealth Management. Year to date, the S&P is up 9 percent and has not had a significant pullback. He noted that the economic data has been disappointing.


"Once you had a market that moved up like this one has, expectations are really your enemy. We're not meeting expectations … then you throw in earnings season. Earnings, I would argue, are coming in better than expected. Underneath the surface is something that's not quite so healthy," he said. "They're struggling on the top line, the revenue side. That's indicative of a global economy growing below trend." The commodities sell-off is also signaling a global weakening, and it accelerated when China released disappointing GDP data Monday.

Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, has also been expecting a pullback. "I still think we're in some sort of process of trading a top. It's hard for me to say," she said. "There has been enough disturbance to suggest the trend is now in question, which is the first time you can say that this year. Certainly the factors have been lining up."
"Every April we have this. It's scary how the market is trending exactly as it has for the last four years running," she said. "There is this confluence of factors. The fundamental case—everyone was excited about the economy improving, but that story broke down. The earnings are not improving. The commodities complex looks just like last year."


Even though economists expect a weaker economy, they do not expect it to be as soft as last year, and stock strategists also expect the market to rebound later in the year, after any sell-off.

Adams said seasonally, April can actually be a good month for stocks so they may hold on, but in the next few weeks, there could be a downdraft as there was in the past three years. "May is when you get a little worried … we've got a sideways trend in place," she said, adding it's also possible there could be a sideways correction. That means stocks would grind in within a range, instead of selling off.

This makes the earnings season particularly key, as traders look for clues about the extent of the soft spot and its impact on corporate profits.

"The next two weeks are really important. That's when the bulk of the market cap reports. They will be extremely important. There's a limited amount of economic data to consume. The huge reports come at the beginning of the month," when April employment data is released, Adams said.

She added that is especially watching industrials and technology. "Those are the areas where the market is expecting the greatest weakness. If there are areas where there could be a surprise and guide higher, those could be the areas. They should be the areas where the turnaround story could occur, should it show up. I'd like to see that, but it's not in my forecast."


Industrial companies GE and Honeywell both reported earnings that slightly beat expectations Friday. GE, however, reduced its forward guidance while Honeywell slightly raised it. In tech, the message has been mixed. IBM fell 8 percent Friday after its weak earnings report, but shares of Google and Microsoft both gained even though revenues missed slightly.

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news source: www.bbc.com

G20 agrees not to set hard targets on debt reduction

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Finance leaders of the G20 economies said on Friday they agreed they did not need to set hard targets for reducing national debt levels, and said they would be watching for negative effects from massive monetary stimulus efforts, such asJapan.

Russian Finance Minister Anton Siluanov said at a news conference that finance officials from the Group of 20 nations believed overall debt reduction was more important than specific figures.
"We agreed that these would be soft parameters, these would be some kind of strategic objectives and goals which might be amended or adjusted, depending on the specific situations in the national economies," he said.

In a communiqué released after a two-day meeting, the G20 said it would be "mindful" of possible side effects of extended periods of monetary stimulus. Central banks have flooded their economies with cheap funds to try to boost borrowing and spending but that has raised concerns about excessive capital flight, particularly to developing nations.
Siluanov said the G20 agreed that greater monitoring of the side effects of Japan's $1.4 trillion program announced earlier this year was needed.

The G20 discussions were dominated by talk of the struggling euro zone, Siluanov said, where harsh austerity measures have failed to lift the region out of its economic slumber. The nature of the discussion was of some concern to officials in other nations.

"It was supposed to be a G20 meeting, but for a moment I thought it was a G7 meeting. All that we heard was how sick Europe is and how badly affected many countries of the world are," said India's finance minister, P. Chidambaram, who spoke at the Peterson Institute in Washington.
"They have a very accommodative monetary policy. They are doing whatever it takes to rescue economies that seem to be tumbling one after another."

SOFT DEBT TARGETS
There has been some disagreement over the need for specific targets for reducing debt. The United States and Japan have opposed committing to a targeted debt-to-GDP level. Russia - this year's G20 chair - had hoped to secure an agreement on targets by the time G20 leaders meet in St. Petersburg in September.

The world's biggest economies are rethinking the austerity drive that dominated the last few years. The austerity argument has been undercut by weakness in economies that undertook severe measures to cut deficits, including Britain, which is headed into its third recession in the last five years.
Fitch cut its credit rating on Britain on Friday to double-A-plus, citing expectations that general government debt will rise to 101 percent of GDP by 2015-2016 due to weak economic growth.
Siluanov also said a greater amount of coordination was needed with the International Monetary Fund on global liquidity, with recommendations expected by next July.

G20 ministers called on the Financial Stability Board to oversee work on reforms for short-term interest rate benchmarks such as Libor in the aftermath of a global rate-rigging scandal. FSB was asked to report back in July on its progress.

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News Source: www.cnbc.com

Soft futures mostly higher - Coffee rebounds from recent losses...

U.S. soft futures were mostly higher during U.S. morning trade on Wednesday, with coffee prices moving higher for a second day amid speculation prices fell too far too quick.

On the ICE Futures U.S. Exchange, Arabica coffee for July delivery traded at USD1.3832 a pound, up 0.8% on the day.

The July contract rose by as much as 1.4% earlier in the session to hit a daily high of USD1.3907 a pound, the strongest level since April 8.

Coffee futures fell to a three-week low of USD1.3357 a pound on Monday, hovering close to a 34-month low of USD1.3207 a pound hit on March 20.

Coffee traders continued to monitor weather conditions in Brazil, as the country’s farmers began harvesting the coffee crop. Brazil is the world's largest producer and exporter of Arabica coffee.

Meanwhile, sugar futures for May delivery traded at USD0.1789 a pound, little changed on the day. The May contract was stuck in a tight trading range between USD0.1782 a pound, the daily low and a session high of USD0.1793 a pound.

Sugar futures advanced Tuesday after wet weather in Brazil caused some delays to the sugar-cane crush. Brazil is the largest producer of sugar cane in the world.

May sugar prices fell to a two-and-a-half-year low of USD0.1747 a pound on April 3, amid the view that global supplies are more than ample to meet world demand.

Elsewhere, cotton futures for May delivery traded at USD0.8374 a pound, up 0.5% on the day. The May contract rose by as much as 0.9% earlier in the day to hit a session high of USD0.8388 a pound.

Prices of the fiber slumped to a six-week low of USD0.8332 a pound on Tuesday after the U.S. Department of Agriculture said that nearly 8% of the U.S. cotton crop was planted as of last week, up from 5% in the preceding week.

The crop update eased recent jitters over a decline in U.S. and global supplies.

The agency said last week that global cotton inventories in the 2012-13 season was expected to rise to a record high of 82.45 million bales, compared to a month-earlier forecast of 81.74 million bales.

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Gold scores modest rebound from 2-year low; caution stays...

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Gold rose 1 percent on Tuesday after a drop to a 2-year low earlier in the session ignited physical buying, but investors frustrated by the metal's lackluster performance remained cautious amid fears of central bank sales and global growth.

Bullion posted its biggest ever daily drop in dollar terms in the previous session, catching many gold bulls and veteran investors by surprise. Gold has now fallen about 20 percent so far this year after an unbroken 12 years of gains.

The typically safe-haven asset has failed to capitalize on tensions in the Korean Peninsula even as Pyongyang made new threats of military action, and has been hit by uncertainty over the U.S. Federal Reserve's stimulus program.

"The scale of the down move is such that whenever we get any signs of stabilization or any official sign of interest to buy, it's going to cause something in the order of a 1.5 to 2 percent rebound. It's only to be expected," said Tim Riddell, head of ANZ Global Markets Research, Asia.

"Given the scale of the sell-off, I would say that the rebound is not that impressive. The fact the stock market is stable is helping, and it's not creating a further position liquidation mode."
Cash gold dropped to as low as $1,321.35 an ounce, but reversed losses to trade at $1,359.51 by 12:47 a.m. ET, up $6.76, with dealers noting buying interest from consumers in Asia. The metal is about $560 below a lifetime high around $1,920 an ounce hit in September 2011.

Platinum and palladium, which have also been hammered by heavy selling, regained strength after Japanese shares pared losses due to renewed weakness in the yen. .T.U.S. gold futures for June delivery fell more than 2 percent to the weakest in more than two years before rebounding slightly, while the most active bullion contract on the Tokyo Commodity Exchange sank as much as 10 percent.
Monday's drop of around $125 per ounce in cash gold eclipsed the rout on January 22, 1980, a day after gold hit its then-record $850 on global panic over oil-led inflation due to Soviet intervention in Afghanistan and the Iranian revolution.

Reuters market analyst for commodities and energy technicals, Wang Tao, expects gold to fall further to $1,245 per ounce.Gold hit an 11-month high in October last year after the U.S. Federal Reserve announced its third round of aggressive economic stimulus, raising fears the central bank's money-printing to buy assets would stoke inflation.

But the gain was erased by a rally in equities, talks the Fed could soon end its bullion-friendly bond buying program, and concerns other indebted euro zone countries could follow Cyprus' plan to sell bullion reserves to raise cash.

Heavy outflows on global gold exchange-traded funds, which cut holdings to their lowest in more than a year, could also mark the end of a love affair between gold and investors.
"The fall in gold prices is reminiscent of some of the market capitulations seen during the global financial crisis when leveraged investors were required to sell assets to maintain balance sheets and preserve liquidity," said Ric Spooner chief market analyst at CMC Markets in Sydney.

"The extent of leverage is now much lower and this may see more orderly conditions return to the gold market sooner rather than later. Markets will also be sensitive to any further information on the situation in Boston and whether or not it has any geopolitical implications."
Physical dealers saw inquiries from jewelers following the latest sell-off, but there were no signs of buying related to tensions between the two Koreas or bombings in Boston, which killed three people.
It was the worst bombing on U.S. soil since security was tightened after the attacks of September 11, 2001. President Barack Obama promised to hunt down whoever was responsible.

Premiums for gold bars edged up to $1.70 to the spot London prices in Singapore on Tuesday from $1.20 on the previous day, but dealers had yet to see a surge in demand from jewelers and speculators.
"I think with a further reduction in gold prices, premiums may go up further. The demand is there, but the Thais are still on holiday and physical offtake in Hong Kong is not fantastic," said a dealer in Singapore.

In other markets, European stocks were seen extending losses while U.S. stock futures were up, pointing to a rebound at the Wall Street open after U.S. stocks dropped more than 2 percent.

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News Source: www.wsj.com

GOLD OUTLOOK: Views On Gold May Get Reassessed Next Week...

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 Gold’s fall under $1,500 an ounce for the first time since in nearly two years may mean a little soul-searching for investors in the metal, market participants said.
June gold futures fell Friday, settling at $1,501.40 an ounce on the Comex division of the New York Mercantile Exchange, and were down 4.7% on the week. On a June futures chart, this is the lowest level since April 2011. On a weekly continuation chart, this is the lowest level for a most-active contract since July 2011.

On the year, gold prices are down 11%. Gold prices reached in bear-market territory, since they are down 22% from the all-time high of $1,923.70 set in September 2011 to Friday’s settlement.
Most-active May silver fell on the day and the week, settling at $26.331, down 3.2% on the week.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 10 see prices up, while 10 see prices down, and one sees prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Gold prices fell to nearly two-year lows when it fell through last week’s low of $1,539.40, triggering resting sell orders. The market initially found support at $1,525 but its pause there was short-lived when selling pushed gold through $1,525 and triggered more resting sell orders, known as sell stops.
“The market uncovered a treasure-trove of sell stops under $1,525,” said Sean Lusk, precious-metals analyst at Ironbeam. “We just saw a cleansing of positions here.”

Lusk said negative sentiment in gold has been building over the past few months with the equities making record highs and investment banks reducing their price forecasts for gold. This week, Goldman Sachs caused a stir in the market when it called for investors to short, or sell, gold.
Additionally, Lusk said with more Federal Reserve governors talking about ending quantitative easing on the idea that the U.S. economy will improve later this year, gold found more pressure. Meeting minutes from the March Federal Open Market Committee from Wednesday showed more Fed governors are seeking to scale back the QE program. On Friday, Boston Fed President Eric Rosengren reiterated these ideas Friday on CNBC.

Gold fell even as equities dropped and was unable to capitalize on the weakness in stocks. Equities, which had put in record highs as recently as Thursday for the Dow Jones Industrial Average and the Standard & Poor’s 500, were pressured by the poor retail sales and profit taking.

U.S. retail sales in March fell 0.4% versus a decline of 0.1% expected. This was the largest drop since June. Economists said a cold snap in March may have trimmed sales, although they also said this might be a sign that higher taxes and sluggish job creation are hurting the U.S. economy.

In other economic news, the producer price index was released and showed wholesale inflation was lower than expected, with the overall index down 0.6% in March versus 0.3% expected, as energy costs fell. The core PPI was up 0.2%. Over the last 12 months, the overall PPI index is up 1.1% in March versus 1.7% in Feb.

Lusk said the PPI data shows that inflation is not an issue, which also weighed on gold Friday.
Charles Nedoss, senior market strategist with Kingsview Financial, said the weakness in equities is getting overlooked as investors sell gold. He said aside from the selling cues from technical charts as prices broke through important support levels, there might be something more concerning to gold investors.

The news report this week that Cyprus might have sell some of their gold reserves to help fund their bailout jarred market participants, he said. The Cypriot central bank said that any decision about gold sales is up to them. Gold analysts said that even if the sales happened, the amount that would be sold – about 10 metric tons – would not have a big supply impact on prices. Yet, Nedoss said, that’s beside the point.

“The question is, what about other countries in the EU? Are they going to be required to put some skin in the game and sell their assets? What about Portugal? What about Italy? They have more gold,” he said.
Nedoss said there are some thoughts that even though the ultimate decision to sell the gold rests with the central bank and not the country, that doesn’t mean they can’t be coerced. It’s that uncertainty and the potential of what that might mean in the future that is likely weighing on gold, he said.

According to Reuters, eurozone finance ministers approved a 10 billion euro bailout for Cyprus on Friday. The Reuters story said in order for Cyprus to meet its financing needs over three years, the country will need to find 13 billion euros by itself, likely coming from the closure of its Laiki bank and the restructuring of the Bank of Cyprus.

Also in Europe, next week is parliamentary voting for the next Italian president. Brown Brothers Harriman said among those seeking to replace current Italian President Giorgio Napolitano is Prime Minister Amato, who implemented the tax on all savings in the early 1990s to enter the eurozone. Napolitano’s term ends May 15.

For price direction Lusk said it’s possible gold might try to probe the $1,400s area again after doing that initially on Friday. “Long term, I think gold has value, but right now, you just have to let the tide go and not step in front of it,” he said.

Nedoss said now that $1,500 broke, he said the next key support is $1,469.70, which is the 200-week moving average. He said he wants to watch how the market acts early next week. “With breaks like this, markets have a way of snapping back to (mess with) as many people as possible. It could rally $40, $50 and (hurt) all the new short” position-holders, he said.

Some analysts said watch whether physical buying picks up after this dip in gold. Chinese buyers have stepped up when prices have fallen and analysts said the Chinese response will be critical for any price support. Earlier this week Hong Kong Census data for February shown a strong month of gold re-exports into China, with 72 metric tons exported directly to China, just under the December record of 89 tons. This came as prices fell about $200 an ounce between those three months. “The pattern certainly displays an even greater demand for gold by China during price (falls),” said TDS.

 

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News Source: www.cnbc.com

Gold Update: Paulson Loses More Than $300 Million as Gold Declines...

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Billionaire John Paulson lost more than $300 million of his personal wealth on his gold bet, as the precious metal fell to its lowest price in almost two years.
Paulson has roughly $9.5 billion invested across his hedgefunds, of which about 85 percent is invested in gold share classes. Gold dropped 4.1 percent today, shaving about $328 million from his net worth on this bet alone.

Gold tumbled and entered a bear market after falling more than 20 percent since August 2011, bringing more bad news for 57-year-old Paulson, who has struggled with poor returns for the past two years. He told investors last year that his $700 million Gold Fund would beat his other strategies over five years because the metal was the best hedge against inflation and currency debasement as countries pump money into their economies. The fund slumped 28 percent this year through March, a person familiar with the matter said this month.

“The recent decline in gold prices has not changed our long-term thesis,” John Reade, a partner and gold strategist at Paulson & Co., said in an e-mailed statement. “We started investing in gold at $900 in April 2009 and while it’s down from its peak to $1500, it’s up considerably from our cost.”
Paulson investors can choose between dollar-and gold- denominated versions for most of the firm’s funds. In addition losses from bullion’s decline, investors in Paulson & Co. funds, including the firm’s founder, lost about $62 million today on their gold-stock investments, based on holdings as of Dec. 31, 2012. New York-based Paulson & Co.’s biggest wagers in miners include a 7.35 percent stake in AngloGold Ashanti Ltd. (ANG)

‘Printing Money’

Goldman Sachs Group Inc. said this week that the turn in the gold-price cycle is accelerating after a 12-year rally as the recovery in the U.S. economy gains momentum. The bank reduced forecasts for the metal through 2014.

Deutsche Bank AG cut its 2013 gold outlook this week by 12 percent, citing a strengthening dollar and a lack of haven buying, and Societe Generale SA said in an April 2 report that gold is in a “bubble.”
Paulson’s Reade said gold will continue to appreciate in the long run because governments are pumping money into the economy at a rate not seen before.

“Federal governments have been printing money at an unprecedented rate,” said Reade. “We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us.”

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Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website century financial brokers.

Here are some useful links that you can follow:

Here is a CFB blog that gives useful daily trade advice... http://century-financial-brokers-uae.blogspot.ae/

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Here is another blog that provides regular news and information and is very useful for Forex Signals. 

News Source: www.bloomberg.com