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Gold’s London AM fix this morning was USD
1,638.75, EUR 1,244.68, and GBP 1,014.83 per ounce. Yesterday's AM fix was
USD 1,632.00, EUR 1,240.97 and GBP 1,014.42 per ounce.
Silver is trading at $30.85/oz,
€23.43/oz and £19.10/oz. Platinum is
trading at $1,550.00/oz, palladium at $671.25/oz and rhodium at $1,350/oz.
Gold fell $3.80 or 0.23% in New York yesterday and
closed at $1,638.20/oz. Gold has been trading mostly sideways in Asia and
within a narrow 8 point spread. In European trading it remains near the close
seen in New York yesterday.
Cross Currency Table – (Bloomberg)
The perfect storm trifecta of bad political and
economic news yesterday out of France, Holland and Germany led to risk off
and falls in many markets. Gold performed well and was resilient considering
the sell off seen in equity markets.
Dutch Prime Minister Mark Rutte
speaks in parliament today after tendering his Cabinet’s resignation to
break a deadlock over further austerity.
French President Nicolas Sarkozy and Francois Hollande will face off in a 2nd round ballot on May 6th
and the prospect of Hollande taking power is making
European markets jittery.
The euro region has government debt at 87.2% of GDP
last year, which is the highest since the start of the euro in 1999.
Manufacturing data from Europe and China contracted in
data released yesterday showing how economic conditions appear to be
deteriorating.
With the euro zone political landscape in crisis mode
and data showing business contracting many investors are putting their
capital in dollars and US Treasuries.
Gold 1 Year Chart – (Bloomberg)
So far gold has not been a prime beneficiary of these
risks but this will likely change soon – especially if financial
conditions deteriorate which seems very likely.
Gold has recently displayed short term correlations
with paper assets such as equities and bonds but these correlations will
again be shown to be fleeting as gold’s long term inverse correlation
with paper assets will reassert itself in the coming months.
Mexico, Russia and Central Banks Continue Diversifying
into Gold
While gold
demand from the western investors and store of wealth buyers has fallen in
recent months, central bank demand continues to be very robust and this is
providing strong support to gold above the $1,600/oz
level.
IMF data released overnight shows that Mexico added
16.8 metric tons of gold valued at about $906.4 million to its reserves in
March.
Russia continued to diversify its foreign exchange
reserves and increased its gold reserves by about 16.5 tons according to a
statement by its central bank on April 20.
Changes to Gold Holdings in IMF (March) - Reuters Global Gold Forum
Other creditor nations with large foreign exchange
reserves and exposure to the dollar and the euro including Turkey and
Kazakhstan also increased their holdings of gold according to the
International Monetary Fund data.
Mexico raised its reserves to 122.6 tons last month
when gold averaged $1,676.67 an ounce.
Turkey added 11.5 tons, Kazakhstan 4.3 tons, Ukraine
1.2 tons, Tajikistan 0.4 ton, and Belarus 0.1 tonnes,
according to the IMF.
Ukraine, Czech Republic and Belarus also had modest
increases in their gold reserves.
Central banks are expanding reserves due to concerns
about the dollar, euro, sterling and all fiat currencies.
There is an increasing realisation
amongst central bankers that gold is a less risky alternative to most paper
currencies and a recent survey showed that that majority of central bank
reserves managers were favourable towards gold.
Signifying the mood of caution among the world’s
central bankers, 71% of those polled said gold was a more attractive investment
than it had been at the start of last year.
Central banks added 439.7 tons last year, the most in
almost five decades, and may buy a similar amount if not more in 2012, the
World Gold Council and many analysts believe.
Turkey’s central bank increased the proportion of
required reserves that commercial banks can deposit in gold last year. The
changes have increased the amount of bullion the country, which owns 209.6
tons, declares in its official reserves.
President Vladimir Putin
Gold accounts for about 3.9 percent of Mexico’s
total reserves and 9.7 percent of Russia’s, according to the World Gold
Council. That compares with more than 70 percent for the U.S. and Germany,
the biggest bullion holders, the data show.
The IMF data records the People’s Bank of China
data showing that at the end of March China’s gold reserves remained
unchanged at 33.88 million ounces.
This seems hard to believe and it remains likely that
China is again quietly accumulating gold reserves and the PBOC will announce
a material increase in their reserves when they are ready to do so.
OTHER NEWS
(Bloomberg) -- Russian Gold Holdings Rise to 28.8 Million Troy Ounces in
March
Russia’s central bank increased its gold holdings to 28.8 million
troy ounces last month, from 28.3 million troy ounces at the end of February,
according to a statement published on its website today.
The stockpile was valued at $47.8 billion as of April 1,
compared with $50.2 billion a month earlier, Bank Rossii
said.
(Bloomberg) -- Gold Is ‘Still in An
Uptrend,’ Credit Suisse Says in Report
Gold is “still in an uptrend and with the exception of silver, the
sector is not overvalued,” Credit Suisse said in an e-mailed report
today.
(PTI) -- India Post offers 6 pc discount
on gold coins
India Post
today said it will offer a six per cent discount on gold coins on the
occasion of Akshya Tritya.
Customers would be able to purchase gold coins of any
denomination and get a six per cent discount from across 31 designated post
offices in the Delhi Postal Circle, India Post said in a statement.
These include post offices in Ashok Vihar,
Civil Lines, Connaught Place, Greater Kailash, Hauz Khas, Janakpuri
B-I and Paschim Vihar,
among others.
Akshya Tritya',
a day in the Hindu calendar, is considered auspicious for buying the precious
metal. Also known as 'Akha Teej',
Akshya Tritya this year
will be celebrated on April 24. The gold coins are available in denominations
of 0.5 grams, 1 grams, 5 grams, 8 grams, 10 grams, 20 grams and 50 grams of
24 carat with 99.99 per cent purity.
India Post, in association with World Gold Council and
Reliance Money Infrastructure Ltd, commenced the sale of gold coins
manufactured by Valcambi, Switzerland. This
arrangement was started in October 2008.
India Post at present sells gold coins through more
than 800 post offices across the country.
NEWS
Gold May Decline as Concern Over European Debt
Bolsters Dollar - Bloomberg
Gold edges down amid euro zone worries; Fed eyed
- Reuters
Euro, shares recover, debt sales eyed
- Reuters
Bank of Japan likely to ease, may buy longer-dated
government bonds - Reuters
Silver ETP Holdings Slump by Most in More Than Four
Years - Bloomberg
COMMENTARY
The unwitting move towards a global gold standard
– Financial Times
Warren Buffet and the New Calculus of Gold
– The Spellman Report
The Best Reason In The World To Buy Gold
– Jim Sinclair’s MineSet
The Implications Of China Paying In Gold
- Jim Sinclair’s MineSet
The Exter Inverted Pyramid
- A Refresher – Zero Hedge
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
Mark
O’Byrne
Goldcore
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