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From the GoldMoney Dealing Desk --
The gold price has returned to
familiar chart territory at just under $1,430 per ounce, following a strong
recovery last Thursday and Friday that saw gold close for the week at $1,419.
Bids have also been returning for risk trades, as the nuclear situation in
Japan has improved and central bank intervention appears
to have saved the yen carry trade. In particular, commodity prices are once again
rising, as seen by the movement of the Continuous Commodity Index at the end
of last week.
Crude oil prices have once again
regained upward momentum on news of western air strikes on Libyan forces
still loyal to Colonel Gaddafi. This situation is bullish for crude oil
prices, and will likely lead to renewed strength across the whole commodity
complex owing to oil’s essential role in the harvesting and extraction
of other commodities.
Rising oil prices will also help
boost the gold price. Historically, oil purchases were conducted in gold. Oil
producing nations often use the US dollars gained from oil sales to buy gold.
This trend is increasing as the dollar weakens and concerns about the fiscal
propriety of the US government and Federal Reserve grow.
Interestingly, Iran – the
fourth largest producer of crude oil and the nation reported to have the
third-highest proven reserves of oil – appears to have been one of the
biggest recent OPEC buyers of gold. As reported by the Financial Times
yesterday, a diplomatic cable obtained by Wikileaks
dated June 2006 reported the Bank of England’s observation of
“significant moves by Iran to
purchase gold” as a means of protecting its reserves from the risk of
seizure.
Observers believe that the
Iranian government now holds over 300 tonnes of
gold bullion – up from 168.4 tonnes in 1996.
In the last decade Iran has been one of the largest bullion buyers after
China, Russia and India, and is now believed to be among the 20 largest gold
reserve holders. Iran is thought to hold roughly the same amount of gold as
the UK. It’s unlikely that the Iranians have stopped buying.
Goldmoney.com
All data and quotes sourced from Reuters.
Published by GoldMoney
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