{"id":33034,"date":"2012-10-19T08:56:03","date_gmt":"2012-10-19T12:56:03","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=33034"},"modified":"2012-10-19T08:57:49","modified_gmt":"2012-10-19T12:57:49","slug":"golds-fall-blamed-on-speculative-sellers-european-politicians-papering-over-differences","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/10\/19\/golds-fall-blamed-on-speculative-sellers-european-politicians-papering-over-differences\/","title":{"rendered":"Gold’s Fall Blamed On “Speculative Sellers”, European Politicians “Papering Over Differences”"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nFriday 19 October 2012, 08:00 EDT<\/strong><\/p>\n

THE SPOT gold price\u00a0traded lower to $1732 an ounce Friday morning in London, near one-month lows, while stock markets and the Euro also fell as a two-day European summit came to a close with several issues unresolved.<\/p>\n

The\u00a0gold price\u00a0in Euros meantime sank to its lowest level since the end of August at \u20ac42,647 per kilo (\u20ac1326 per ounce).<\/p>\n

Heading into the weekend, the Dollar\u00a0gold price\u00a0looks set for its second successive weekly fall, the first time this has happened since May.<\/p>\n

“We hold selling by speculative financial investors responsible for the price slide,” says today’s Commodities Daily note from Commerzbank.<\/p>\n

“In recent weeks they had strongly built up their positions and may now be seeing themselves forced to take profits given the faltering upswing.”<\/p>\n

The\u00a0silver price\u00a0also fell this morning, hitting a six-week low at $32.26 per ounce. Most other commodities saw gains, with the exception of copper which sold off, while US, UK and German government bonds all rallied.<\/p>\n

Leaders meeting at the two-day European Union summit in Brussels, which concludes today, took a step towards the creation of a single Eurozone banking supervisor Thursday.<\/p>\n

An agreement was reached that will give the European Central Bank supervisory powers over the approximately 6,000 financial institutions in the single currency area.<\/p>\n

Germany has previously argued that only the largest institutions should come under ECB supervision. Under the agreement, day-to-day oversight for smaller institutions will remain in the hands of national bodies, although the ECB will have powers to intervene in any bank.<\/p>\n

There is no agreement however on the direct recapitalization of banks by the European Stability Mechanism. Leaders agreed in principle to the idea of using bailout funds to recapitalize banks in July 2011, although the creation of a single banking supervisor has since become a prerequisite for that.<\/p>\n

Thursday’s agreement “papers over significant differences over the direct recap” one unnamed EU official told the Financial Times.<\/p>\n

“The direct recap is going to be much more difficult.”<\/p>\n

A French source briefed Reuters to say they expect direct recapitalization could be as early as the first quarter of next year, although a German government source told the same newswire it is “very unlikely” to happen soon.<\/p>\n

The\u00a0summit’s conclusions\u00a0published Friday contained no mention of Spain or Greece.<\/p>\n

“Here’s an idea that almost certainly wasn’t discussed at Thursday night’s European summit,” adds a story in\u00a0Friday’s Wall Street Journal.<\/p>\n

“Using countries’ gold reserves to lower the borrowing costs of Eurozone governments.”<\/p>\n

The WSJ report refers to a\u00a0proposal\u00a0by the World Gold Council that some Eurozone nations could reduce bond yields if they pledged gold as collateral.<\/p>\n

“As a real asset, the use of gold as collateral is not inflationary,” says economist Andrew Lilico in a paper by consultancy Europe Economics commissioned by the World Gold Council, “any more than would be the use of historic buildings or military equipment or islands or any other of the forms of collateral that have been proposed for distressed sovereigns.”<\/p>\n

Although it appears the proposal was not discussed at this week’s EU summit, a\u00a0draft paper\u00a0on the subject has been published on the European Parliament website.<\/p>\n

Over in India meantime, traditionally the world’s biggest source of gold demand, gold bullion\u00a0imports in the final three months of the year are set to rise for the first time in six quarters following recent gains for the Rupee,\u00a0Bloomberg reports.<\/p>\n

“The appreciation in the Rupee has caused the\u00a0gold price\u00a0to correct from the record levels and this correction is seen as an opportunity by many to get into gold,” says fund manager Chirag Mehta at Quantum Asset Management.<\/p>\n

“With the festival season and marriage season starting now, demand will gain further momentum.”
\nGold imports could rise as high as 200 tonnes this quarter, according to All India Gems & Jewellery chairman Bachhraj Bamalwa, up from an estimated 157 tonnes in Q4 2011.<\/p>\n

In South Africa, Gold Fields has said all but 1500 of the 15000\u00a0gold mining\u00a0workers threatened with dismissal have returned to work. Those who have not have been fired.<\/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. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+<\/p>\n

(c) BullionVault 2012<\/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 Friday 19 October 2012, 08:00 EDT THE SPOT gold price\u00a0traded lower to $1732 an ounce Friday morning in London, near one-month lows, while stock markets and the Euro also fell as a two-day European summit came to a close with several issues unresolved. The\u00a0gold price\u00a0in Euros meantime … <\/p>\n

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