{"id":40271,"date":"2013-07-23T09:37:24","date_gmt":"2013-07-23T13:37:24","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=40271"},"modified":"2013-07-23T09:37:24","modified_gmt":"2013-07-23T13:37:24","slug":"gold-now-heavy-after-historically-strong-1-month-rally","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/07\/23\/gold-now-heavy-after-historically-strong-1-month-rally\/","title":{"rendered":"Gold “Now Heavy” After Historically Strong 1-Month Rally"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Adrian Ash<\/strong>
\nBullionVault<\/strong><\/a><\/span>
\nTuesday, 23 July 08:55 EST<\/strong><\/p>\n

The PRICE OF GOLD eased back to $1330 per ounce Tuesday morning in London, dropping 0.7% from yesterday’s 5-week highs as commodities slipped with major government bond prices.<\/p>\n

\u00a0Asian stock markets rose as the Japanese Yen edged lower. European stocks and US equity futures crept 0.2% higher.<\/p>\n

\u00a0“We believe there is a strong element of short covering behind the recent buying in gold,” says one broker’s note, pointing to the record-large number of bearish bets held by speculative traders in gold futures.<\/p>\n

\u00a0“Precious metals are looking heavy,” says Standard Bank’s commodity team in London, saying that gold prices are “sitting on support at $1330.”<\/p>\n

\u00a0Gold demand in China \u2013 the world’s No.2 consumer nation \u2013 eased off Tuesday, with premiums for 0.995 fine gold bars traded in Shanghai slipping to $20 per ounce above benchmark London prices, down from $37 a fortnight ago.<\/p>\n

Yesterday saw new gold bullion import rules in India<\/a>, with the Reserve Bank demanding that importers set aside one-fifth of new shipments for re-export.<\/p>\n

\u00a0India’s Rupee rallied from record lows, widely blamed on the country’s widening current account deficit.<\/p>\n

\u00a0Gold imports will fall nearly two-thirds in July-December from 2012, reckons the All India Gems & Jewellery Trade Federation. But “this is an overly pessimistic appraisal,” says Commerzbank, “probably aimed at encouraging the Indian central bank and government to loosen the restrictions.”<\/p>\n

\u00a0The central bank of world No.4 gold consumer Turkey meantime raised interest rates on overnight loans by 0.25% on Tuesday.<\/p>\n

\u00a0The Turkish Lira rose from its weakest level to the US Dollar since the revaluation of 2005 knocked 6 zeroes from the currency.<\/p>\n

\u00a0Rising 12% from June 28th, US gold prices have now beaten the average 1-month gold rally<\/a> of the last 45 years following drops as bad or worse than April-June 2013.<\/p>\n

\u00a0Speaking Monday to CNBC, “Gold wants to go higher<\/a>,” reckons Dennis Gartman, “probably predicated on a continued expectation that the Fed will continue to expand reserves, and so shall too other central banks.”<\/p>\n

\u00a0The US Federal Reserve meets Tuesday and Wednesday next week to set policy until September.<\/p>\n

\u00a0“You don’t sell backwardations in any market,” adds Gartman \u2013 who said gold was “going lower”<\/a> on June 24th, but said it was “time to go to the sidelines” 4 days later when gold bottomed at $1181 \u2013 “and you specifically don’t sell backwardation in the gold market.”<\/p>\n

\u00a0Backwardation is when prices for nearer-term delivery are more expensive than future settlement \u2013 a rare situation in gold, which incurs storage costs and lost interest on cash over time.<\/p>\n

\u00a0That creates what’s called “contango”, with prices rising the further ahead settlement is scheduled.<\/p>\n

\u00a0“[But] I complain about the current claims of backwardation in gold,” counters Nick Laird of gold-chart site ShareLynx<\/a>, “[because] the spread between the Last\/Near Future needs to go below zero for a full inversion.<\/p>\n

\u00a0“In gold there is little to see except the first couple of months dipping.”<\/p>\n

\u00a0July gold futures<\/a> settled Monday at $1336.40 per ounce, 40\u00a2 above the August contract, equal to September, and below all other contract prices.<\/p>\n

\u00a0“After falling sharply in June on a re-pricing of Fed easing policies, gold prices have [only] stabilized in July,” reckons analysis from investment bank Goldman Sachs.<\/p>\n

\u00a0Holding its 12-month forecast for the gold price at $1175 per ounce \u2013 the 3-year low hit at the end of June \u2013 “medium term we expect that gold prices will decline further given our US economists’ forecast for improving economic activity and a less accommodative monetary policy stance.”<\/p>\n

\u00a0Ending QE and raising rates “is simply a reversal of the process that drove up gold prices from the end of 2008 to mid-2011,” says commodities analyst Gary Clark at Roubini Global Economics.<\/p>\n

\u00a0“Investors piled into gold ETFs under precisely the opposite conditions: falling real [interest] rates and rising tail risk.”<\/p>\n

\u00a0US Treasury yields rose Tuesday as gold prices slipped, rising to a 3-session high of 2.52%.<\/p>\n

\u00a0Inflation was last pegged on the official US Consumer Price Index at 1.8%.<\/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","protected":false},"excerpt":{"rendered":"

London Gold Market Report from Adrian Ash BullionVault Tuesday, 23 July 08:55 EST The PRICE OF GOLD eased back to $1330 per ounce Tuesday morning in London, dropping 0.7% from yesterday’s 5-week highs as commodities slipped with major government bond prices. \u00a0Asian stock markets rose as the Japanese Yen edged lower. European stocks and US … <\/p>\n

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