{"id":30490,"date":"2012-06-27T09:03:22","date_gmt":"2012-06-27T13:03:22","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=30490"},"modified":"2012-06-27T09:03:22","modified_gmt":"2012-06-27T13:03:22","slug":"pressure-mounting-on-gold-but-central-banks-still-adding-to-reserves-italys-borrowing-costs-creep-higher","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/06\/27\/pressure-mounting-on-gold-but-central-banks-still-adding-to-reserves-italys-borrowing-costs-creep-higher\/","title":{"rendered":"“Pressure Mounting” on Gold, But Central banks Still Adding to Reserves, Italy’s Borrowing Costs Creep Higher"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nWednesday 27 June 2012, 08:15 EDT<\/strong><\/p>\n

U.S. DOLLAR gold prices\u00a0dropped as low as $1565 an ounce during Wednesday morning’s London trade \u2013 1.4% down on this week’s high \u2013 before recovering some ground by lunchtime, while stock markets posted slight gains ahead of tomorrow’s European Union summit.<\/p>\n

Silver prices\u00a0traded below $27 an ounce for most of this morning, while other industrial commodities were broadly flat on the day by lunchtime.<\/p>\n

On the currency markets meantime, the Euro was broadly flat against the Dollar, trading just below $1.25 for most of the morning.<\/p>\n

“We’re in a bit of a period over the summer when we are going to see very little meaningful action by policymakers in three key regions \u2013 Europe, the US and China,” reckons Daniel Brebner, head of metals research at Deutsche Bank.<\/p>\n

“Pressures in the gold market will continue to mount…I don’t think there’s any kind of catalyst near term for a significant rebound in\u00a0gold prices.”<\/p>\n

Brebner adds however that he expects “very steady buying by central banks” to continue, which “should help\u00a0gold prices\u00a0from weakening too much”.<\/p>\n

At tomorrow’s EU summit, Italian prime minister Mario Monti is expected to propose using money from Eurozone bailout funds to ease sovereign borrowing costs by buying debt on the open market, the\u00a0Financial Times reports, despite the policy drawing criticism from Bundesbank president Jens Weidmann after it was put forward last week.<\/p>\n

Weidmann described the idea as “state financing via the central bank printing press”, prompting Monti to respond that the Bundesbank chief has “badly misunderstood” the proposal.<\/p>\n

Italy sold \u20ac9 billion of six-month bills Wednesday, at an average yield of 2.96% \u2013 up from 2.10% last month.<\/p>\n

“Today’s bill sale points to the sovereign getting this supply away but at yield levels sufficiently elevated to leave a niggling doubt at least as to the medium-term sustainability of the country’s public finances,” says Rabobank strategist Richard McGuire.<\/p>\n

Italy’s rise in borrowing costs follows an auction the previous day that saw 2-Year yields rise to 4.71%, their highest level since December.<\/p>\n

Italy is due to auction \u20ac5.5 billion of 5-Year and 10-Year bonds tomorrow. On the bond markets, 10-Year bonds traded at yields as high as 6.2% Wednesday morning, up from 5.9% at the start of June.<\/p>\n

Elsewhere in Europe, German chancellor Angela Merkel told the German parliament Wednesday
\nthere is no “magic formula” that will solve the Eurozone crisis.<\/p>\n

“It is imperative that we don’t promise things that we cannot deliver and that we implement what we have agreed,” said Merkel, adding that joint liability for sovereign debts “can only happen when sufficient controls are in place.”<\/p>\n

“I don’t see total debt liability as long as I live,” German chancellor Angela Merkel reportedly told her Free Democrat coalition partners Tuesday.<\/p>\n

Over in Madrid, the Spanish government has scrapped a tax rebate for homeowners brought in six months ago by prime minister Mariano Rajoy to meet election promises, citing its growing budget deficit.<\/p>\n

“The deficit has started on a downward path and we expect that to intensify,” said deputy budget minister Marta Fernandez Curras Tuesday.<\/p>\n

Here in London, Bank of England governor Mervyn King cited “worsening…in the [economic] position in Asia and other emerging markets” as a reason he voted for an additional \u00a350 billion of quantitative easing earlier this month.<\/p>\n

“We are in the middle of a deep crisis,” King told the Treasury Committee on Tuesday, “with enormous challenges to put our own banking system right and challenges for the rest of the world that they are struggling with.”<\/p>\n

Proposed additional QE was defeated by five votes to four at the June Monetary Policy Committee meeting. The MPC makes its next policy announcement Thursday next week.<\/p>\n

The central banks of Kazakhstan, Russia, Turkey and Ukraine were among those who added to their\u00a0gold bullion\u00a0holdings last month, according to figures published Tuesday by the International Monetary Fund.<\/p>\n

India’s central bank meantime is\u00a0considering banning the sale of gold coins\u00a0by the country’s banks, according to India press reports on Wednesday.<\/p>\n

Indian trade with Dubai meantime totaled $10 billion in the first quarter of this year \u2013 making India Dubai’s biggest trading partner ahead of China \u2013 data published by Dubai Customs show.\u00a0gold bullion\u00a0represented both the biggest import and biggest export for Dubai.<\/p>\n

Ben Traynor<\/strong><\/a>
\nBullionVault<\/strong><\/a><\/p>\n

Gold value calculator \u00a0\u00a0| \u00a0\u00a0Buy gold online at live prices<\/strong><\/a><\/p>\n

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.<\/p>\n

(c) BullionVault 2011<\/p>\n

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013 should you choose to act on it.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

London Gold Market Report from Ben Traynor BullionVault Wednesday 27 June 2012, 08:15 EDT U.S. DOLLAR gold prices\u00a0dropped as low as $1565 an ounce during Wednesday morning’s London trade \u2013 1.4% down on this week’s high \u2013 before recovering some ground by lunchtime, while stock markets posted slight gains ahead of tomorrow’s European Union summit. … <\/p>\n

Continue reading ““Pressure Mounting” on Gold, But Central banks Still Adding to Reserves, Italy’s Borrowing Costs Creep Higher”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-30490","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=30490"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30490\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=30490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=30490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=30490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}