{"id":38735,"date":"2013-06-04T08:43:07","date_gmt":"2013-06-04T12:43:07","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=38735"},"modified":"2013-06-04T08:43:07","modified_gmt":"2013-06-04T12:43:07","slug":"gold-slips-as-india-blocks-imports-analysts-see-short-covering-rally-to-1450-or-more","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/06\/04\/gold-slips-as-india-blocks-imports-analysts-see-short-covering-rally-to-1450-or-more\/","title":{"rendered":"Gold Slips as India Blocks Imports, Analysts See “Short-Covering” Rally to $1450 or More"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Adrian Ash<\/strong>
\nBullionVault<\/strong><\/a>
\nTues 4 June, 08:00 EST<\/strong><\/p>\n

The WHOLESALE\u00a0gold price slipped back below $1400 per ounce Tuesday morning in London as world stock markets rose and the Indian government tightened restrictions on gold importers once again.<\/p>\n

After Monday’s weak US manufacturing data gave gold what Commerzbank calls “sufficient fuel” to touch the $1415 level \u2013 identified by some technical analysts as key resistance \u2013 the gold price dropped $8 in 15 minutes mid-morning.<\/p>\n

With immediate effect, “Any import of gold on consignment basis [where the buyer has yet to pay for the gold] shall now be permissible only to meet the needs of exporters of gold jewellery,” the Reserve Bank of India\u00a0said in a statement.<\/p>\n

The world’s #1 consumer market for physical gold, India recorded a trade deficit worth $17.8 billion in March \u2013 equal to 11% of economic output.<\/p>\n

Some 40% of March’s deficit was due to gold bullion imports.<\/p>\n

“There’s no doubt that India is a strong demand market for gold,” says Manne Rasmussen, an analyst at the $650 million Vontobel Belvista Commodity Fund in Zurich, quoted by the\u00a0Wall Street Journal\u00a0yesterday.<\/p>\n

Rasmussen says India’s surging gold demand was a reason Vontobel recently closed a bet on the gold price falling.<\/p>\n

India’s government yesterday corrected\u00a0the 262 tonnes of gold imports\u00a0reported for May by Finance Minister P. Chidambaram to 162 tonnes.<\/p>\n

That was still more than all Indian gold imports during April to June 2012, however.<\/p>\n

“Physical buying in India [was already] virtually non-existent” Tuesday morning, said brokers Marex Spectron in a market note, “and Chinese demand is much smaller above $1400.”<\/p>\n

“A recovery in the stock market is [also] currently a negative factor for gold,” Peter Fertig at Quantitative Commodity Research Ltd told Bloomberg today.<\/p>\n

With developed world stock markets gaining 14.5% so far in 2013, according to Reuters data, the gold price has dropped 15.7% and silver bullion is down more than 25%.<\/p>\n

Western households cut their demand for physical gold in May from April’s 16-month high, but remained positive according to\u00a0Bullion Vault’s latest Gold Investor Index.<\/p>\n

“There is a case to be made for a short-covering rally in the near term,” says TD Securities in Toronto, pointing to the record-large bearish betting by speculative traders in US gold futures and suggesting a possible move “into $1500 per ounce territory.”<\/p>\n

Thursday’s interest-rate decisions in London and Frankfurt, plus Friday’s US jobs data, “[are] likely to keep price action choppy,” says Credit Suisse.<\/p>\n

“Add in a dash of short-covering and it would not be too surprising to see gold reach the next technical resistance level of $1422\/24 in the next few days, perhaps even $1445\/50.<\/p>\n

“However, we think that any short-term rally will be limited.”<\/p>\n

Fellow London market maker UBS agrees, saying that “Gold is seemingly becoming less relevant in the current environment…prompting specs to take an aggressive short position in gold.”<\/p>\n

If Friday’s US non-farm payrolls report is weaker than analysts expect, “The dominance of shorts increases the risk of a short-covering rally” in the\u00a0gold price.<\/p>\n

Stock markets rebounded worldwide meantime Tuesday morning, with Japan’s Nikkei index regaining half of Monday’s near-4% drop.<\/p>\n

Turkish equities also rose sharply, as did the Lira and Ankara’s government bond prices, despite fresh anti-government protests across the country.<\/p>\n

One protester died Monday in the city of Antakya, near NATO member Turkey’s border with war-torn Syria.<\/p>\n

Despite prime minister Erdogan flying out to a planned meeting in Morocco, police today deployed water cannon around his official residence.<\/p>\n

Turkey imported 43.5 tonnes of gold in May, according to the Istanbul Gold Exchange, just shy of April’s 5-year record.<\/p>\n

Adrian Ash<\/strong><\/span><\/a><\/p>\n

BullionVault<\/strong><\/span><\/a><\/p>\n

Gold price chart, no delay | Buy gold online<\/strong><\/span><\/a><\/p>\n

 <\/p>\n

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.<\/p>\n

 <\/p>\n

(c) BullionVault 2013<\/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

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

London Gold Market Report from Adrian Ash BullionVault Tues 4 June, 08:00 EST The WHOLESALE\u00a0gold price slipped back below $1400 per ounce Tuesday morning in London as world stock markets rose and the Indian government tightened restrictions on gold importers once again. After Monday’s weak US manufacturing data gave gold what Commerzbank calls “sufficient fuel” … <\/p>\n

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