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WHOLESALE PRICES to buy gold were little changed in
London on Friday, ending the short pre-Christmas session at $1607 per ounce, some
0.6% higher against the Dollar from last week's finish.
Silver prices also held flat, moving in a tight range below $29.50 per ounce
and recording a London Fix almost 1.9% down for the week at midday.
Thursday's series of attacks in the Iraqi capital Baghdad, which killed
perhaps 200 people, were followed today by the murder of 40 people by two
suicide car bombers in Damascus, Syria – blamed by the government on
al-Qaeda. But global stock markets ticked higher overall in what equity
dealers called "very thin" trade.
US
crude oil prices extended their strongest week since October, up more than
6.5% from last Friday.
"Our Hong Kong office observes that the gold price has gone up during
the period between Christmas and New Year in eight of the last nine years
(2004 being the exception)," said Mitsui's London note today,
"[rising] by just over 2% on average.
Dealing
in London's bullion market will re-open Wednesday after the Christmas and
Boxing Day holidays.
"If [the] trend continues," says Mitsui, "gold would stand around
$1,650 by the year's end."
"[But]
the 200-day moving average, currently at $1624, continues to provide strong
resistance," says Russell Browne at Scotia Mocatta
in New York.
"We still stress the vulnerability of precious metals to a tightening of
Eurozone money market liquidity," says Standard Bank's London team,
"which might result from the region’s sovereign debt
problems."
European Central Bank member Lorenzo Bin Smaghi
– who leaves the ECB this month to avoid "over representation"
of Italy after Mario Draghi became president in
November – says in a Financial Times interview today that he
sees "no reason" not to use quantitative easing "if the
economic outlook deteriorated and deflation became a risk."
Spanish and Italian government bonds ticked lower in price on Friday, nudging
the interest rate on 10-year debt above 5.4% and 7.0% respectively.
The ECB should "use as much constructive ambiguity as possible" Bin
Smaghi says, adding that the ECB "has a duty
of action" to help struggling governments where the issue is liquidity,
not solvency.
Meantime in India – the world's No.1 physical gold consumer –
"A sharp drop in the gold price is required to boost the demand," MoneyControl today quoted a Chennai-based wholesaler, as
the Indian Rupee gold price continued to hold near historic highs thanks to
the currency's record low exchange rate.
"Jewellery demand is very weak...gold investment demand is also
weak," the Reuters news agency quotes a spokesperson in Ahmedabad for Zaveri and Co, one of India's largest jewelry
retail chains, who attributes low sales to the current period of Kharmas observed by some Hindu calendars, when there are
no "auspicious" festivals or events.
Across in Tehran, however, "Iranians are rushing to buy gold and
Dollars," reports Bloomberg, "sending the national currency
plunging."
The Rial has lost some 15% vs. the Dollar this
month, and bureau de change are charging 15,300 Rials
per Dollar, says Bloomberg – almost 39% above Tehran's official rate.
"State television this week showed lines of people camped out overnight
in front of state banks, with sleeping bags and blankets, saying they were
waiting to buy gold coins," the newswire goes on.
Faced with new US and EU sanctions – plus inflation running near 20%
per year – the Central Bank of Iran suspended deliveries of gold coins
on Dec. 20, imposing what it calls a "just distribution" system by
delaying settlement of new purchases by four months.
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