Gold Demand Trends Show Chinese Growth, Indian Weakness & Revival of US Consumers as Fresh Greek Rumors Dent Euro

London Gold Market Report
from Adrian Ash
Thurs 16 Feb., 09:45 EST

WHOLESALE MARKET prices to buy gold bullion slipped further on Thursday in London, falling to a three-week low beneath $1709 per ounce as a raft of positive US data buoyed the Dollar, and fresh rumors broke of a Eurozone exit for Greece.

Last night’s phone-conference of Euro politicians said that Greece must accept extra budgetary oversight if it is to get the extra bail-out funds to meet March’s critical bond-repayment deadline.

US crude oil prices meanwhile ticked near five-week highs at $101 per barrel. Silver prices fell 2.4% to hit the lowest level since 25 January around $32.70 the ounce.

The price to buy gold fell to £1090 per ounce for UK savers, but held above €42,300 per kilo for Eurozone investors as the single currency dipped below $1.30.

“Key gold support is in the $1706 area and resistance is at last week’s high around $1752,” reckons the latest technical analysis from bullion bank Scotia Mocatta.

“Market sentiment towards [buying gold] seems broadly bullish, but some large stops lurking above $1730 are helping to keep a lid on things,” says a London dealer.

More broadly, “As a whole gold is adopting a more prominent role in the financial system,” said the World Gold Council’s Marcus Grubb to MineWeb this morning, launching the market-development organization’s latest quarterly Gold Demand Trends report.

“Central banks are [now] a key part of this market. They bought 439 tonnes last year, which is a huge move on the demand side, but they also were leasing more gold into the market…largely [to raise cash for] adding liquidity to help the European banking system.”

Spying “no end currently to the woes of Greece and Italy,” the WGC’s new report says that “ongoing difficulties in the [single Euro currency zone] will further stimulate gold investment demand.”

Gold Demand Trends also shows China’s private demand overtaking world No.1 India in the fourth quarter of 2011, by holding equal with the last 3 months of 2010 by volume while India’s demand fell 42% to the lowest level since the global recession of early 2009.

France saw positive net gold investment in 2011 for the third year in a row, after being a consistent “dishoarder” for almost two decades.

Minting some 80 tonnes of gold coin, Turkey was the world’s top bullion mint once again, according to the WGC’s data.

On the economic front Thursday, new US jobless claims fell to a near 4-year low last week, new figures showed, while housing starts were also better than analysts forecast.

Excluding fuel and food, factory-gate prices in the US rose 3.0% year-on-year in January, compared with Wall Street estimates of 2.6%.

In contrast to US gold investment demand, which slipped 29% by value at the end of 2011, US demand to buy gold jewelry rose 12% in the last quarter compared with Christmas 2010, says the WGC’s report, reaching $2.3bn.

But “Household debt remains elevated by historical standards,” says a new report from the Federal Reserve Bank of Richmond,  “and other determinants of consumer spending remain weak.”

Chinese households meantime grew their demand to buy gold jewelry 27% by value year-on-year, spending three times as much as did US consumers.

China’s physical gold investment demand rose 20% by value.

“It will probably take some time before investors in Hong Kong fully warm up to this [gold ETF] product,” writes UBS strategist Dr.Edel Tully, noting unimpressive demand for the city’s new exchange-traded gold trust, launched on Monday.

“One of the main appeals of gold in its key markets such as China and India is that it is a tangible, hard asset and easily accessible to retail consumers in physical form.

“The shift from gold coins and bars to an exchange-traded product may take some getting used to.”

Adrian Ash

Gold price chart, no delay   |   Buy gold online at live prices

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 today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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 – and must be verified elsewhere – should you choose to act on it.



EUR Tumbles on Fresh Greek Debt Concerns

Source: ForexYard

The euro tumbled throughout the trading day yesterday, after a planned meeting of euro-zone finance ministers was canceled. The meeting was supposed to result in Greece receiving a badly needed bailout package. The cancellation was taken as a sign that other euro-zone countries are worried that Greece will not stand by the conditions required of it to receive the bailout. Turning to today, traders will want to continue monitoring the Greek situation for clues as to where the market is heading. In addition, a batch of US data set to be released at 13:30 GMT may generate heavy volatility.

Economic News

USD – USD Moves Up Following Fresh Euro-Zone Worries

The US dollar saw gains against several of its main currency rivals yesterday, following negative euro-zone news that cast doubts on whether Greece will be able secure a much needed bailout package. The EUR/USD dropped as low 1.3065 before staging an upward correction and stabilizing around the 1.3100 level. Against the Swiss franc, the USD jumped close to 100 pips before stabilizing around the 0.9215 level.

Turning to today, a batch of US news is likely to generate significant market volatility. Traders will want to pay attention to the Building Permits and PPI figures, as well as the weekly Unemployment Claims. They are all considered valid indicators of economic health, and if positive, could result in gains for the greenback during the afternoon session. Additionally, a speech from Fed Chairman Bernanke at 14:00 GMT may lead to market activity. An optimistic speech regarding the US economy may help the dollar extend its bullish trend against the euro.

EUR – Risk Aversion Turns EUR Bearish

The euro tumbled against its safe-haven currency rivals yesterday, following news that approval for a Greek bailout package has been delayed. The news caused investors to abandon the euro in favor of safer assets, such as the US dollar and Japanese yen. Earlier pledges by China to keep on buying European debt were largely ignored following the Greek news. The EUR/USD fell below the psychologically significant 1.3100 level, while against the JPY, the common currency dropped over 100 pips during the afternoon session.

Turning to today, traders will want to continue monitoring the Greek situation for clues as to where the euro will be heading. With the bailout deal currently in question, the euro may have a hard time reversing its bearish trend. In addition, fears that Greece could still default on its debt even if it secures a bailout deal do not bode well for the euro. That being said, with China maintaining that it will continue to buy euro-zone debt, the common currency may be able to stabilize against its main rivals.

JPY – JPY Moves Up on EUR Following Greek News

The EUR/JPY spiked as high as 103.50 during European trading yesterday, following a pledge by China to continue buying euro-zone debt. The pair was not able to maintain its upward momentum, and tumbled well over 100 pips after it was announced that there may be delays in Greece receiving it’s much needed bailout package.

Turning to today, euro-zone news is once again forecasted to influence the level of risk taking in the market place. Traders will want to pay attention to any updates regarding the Greek debt crisis. Unless positive news is released, the JPY may continue to move up against riskier currencies like the euro.

Crude Oil – Oil Maintains Bullish Trend amid Middle East Tensions

The price of crude oil continued to go up yesterday, as Iranian threats to limit exports led to supply side fears among investors. Crude went as high as $102.44 a barrel late in the European session before stabilizing around the $101.50 level. Oil was able to maintain its bullish momentum despite Greek debt worries that drove investors away from riskier assets throughout the day.

Today, traders will want to continue monitoring the situation in the Middle East. Any actions by Iran to limit oil exports to Europe may result in prices going up further. For the time being, it appears that unless the situation dramatically calms down, crude is likely to remain above the $100 level.

Technical News


Following dramatic shifts in recent days, technical indicators are inconclusive as to what direction this pair is headed. The Stochastic Slow on the weekly chart has formed a bearish cross, indicating that downward movement could occur in the near future. At the same time, the Williams Percent Range is hovering in oversold territory. Traders may want to take a wait and see approach for this pair.


The daily chart’s Bollinger Bands have begun to narrow, indicating that a major price shift could occur in the near future. The Stochastic Slow on the same chart has formed a bullish cross, which typically means upward movement could occur. Traders may want to open long positions ahead of a possible upward breach.


Most technical indicators place this pair in overbought territory, indicating that downward movement could occur in the near future. These include the Williams Percent Range on the weekly chart, which is currently at -10, and the Relative Strength Index on the daily chart, which has leveled out at 90. Traders may want to go short in their positions.


Most technical indicators on the daily and 8-hour charts place this pair in neutral territory, meaning that no major market shifts are expected to take place. That being said, the Williams Percent Range is slowly drifting into overbought territory. Traders will want to keep an eye on this indicator. If it goes above -20, the pair may see a downward reversal.

The Wild Card


The daily chart’s Williams Percent Range has drifted into oversold territory, indicating that an upward correction could take place in the near future. This theory is supported by the Relative Strength Index on the same chart, which has dropped below the 30 level. Forex traders may want to go long in their positions ahead of a possible upward correction.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.


Delay in Greek deal continues to punish Euro


The Greek deal delay continues to punish Euro today as well with the single currency going below 1.3000 levels. The pair continued the loss since the early Asian session and continued in European session to form a low of 1.2982. It is hovering around 1.3000 levels down about still down about half a percent for the day. The support may be seen at 1.2980 and below at 1.2950. The resistance may be seen at 1.3050 and above at 1.3090/3100 levels. The jinx of Greek deal is far from untangled. The next deadline for the deal comes next week.

Compared to Euro, the sterling pound is stronger but still trading in red against the US dollar. It is currently trading around 1.5675, down about 0.10% for the day. The support may be seen at 1.5660 and below at 1.5600. The resistance may be seen at 1.5700 and 1.5730. The pair is trading in a consolidation phase. The nationwide consumer index came better than expectation. It rose to 47 compared to expected value of 40. It felt to push the pound higher.

Encouraging employment data came from down under. The unemployment rate fell to 5.1% against the expected unemployment of 5.3%. The 46.3k employment added in January against the expected value of 10.9k. After the data, the Australian dollar rose to a high of 1.0737. But the cheer was short lived as the delay in Greek deal propelled the greenback against the Australian dollar. It is currently trading near 1.0667, down about quarter a percent. The support may be seen at 1.0650 and the resistance may be seen at 1.0700.

The weakening of Japanese Yen continued today as well and took out yesterday’s high of 78.65. The pair is approaching the 79 levels and high for the day so far is 78.82. The support may be seen at 78.50 and the resistance may be seen at 79 and 79.50.

The USD/CHF pair is approaching the 0.9300 levels and formed a high of 0.9296. It is currently trading near 0.9280, up about half a percent. The support may be seen at 0.9250 and below at 0.9200. The resistance may be seen at 0.9300.

The US dollar index has taken out 80 levels is currently trading around 80.10. 

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Santorum Overtakes Romney in the Polls

Republican presidential contender Rick Santorum has overtaken Mitt Romney in the battle for the party’s nomination. According to the Pew Research Center poll, it also shows both losing to President Barack Obama in hypothetical matchups.Santorum got 30 percent of Republican voters in the February poll, while Romney got 28 percent. And according to a survey of all registered voters – Obama holds a 10 percentage point lead over Santorum and 8 points over Romney.Romney’s status in the race was shaken when Santorum won Colorado, Minnesota and Missouri on February.

USD On the Rise

Source: ForexYard


The greenback made gains this morning against the euro and Swiss franc. A few factors contributed to this morning’s rise, including positive news for the USD. There are signs that the US stock markets were showing resilience helped boost investor confidence in the overall strength of the USD and the US economy.  Also giving the USD a boost were the positive forecasts of the housing and unemployment figures expected later today. While forecasts are certainly good, traders would be well advised to keep a close eye on degree of impact the expected figures have.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Volatility Continues

Source: ForexYard


The EUR/USD continued to take a downward turn as news regarding the anticipated Greek bailout package is not inspiring confidence amongst investors. The news that EU finance ministers were looking for ways to delay parts of the second Greek bailout has caused a great deal of uncertainty regarding the euro. As of this morning the EUR/USD was at its lowest point in three weeks at $1.3020.

The next development in this story might have to wait until next Monday when EU finance minister are to meet regarding the approval of a second rescue package for Greece. Until then, there is a possibility that volatility will continue.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Swedish Riksbank Cuts Repo Rate 25bps to 1.50%

Sweden’s Riksbank cut its benchmark repo rate by another 25 basis points to 1.50% from 1.75%.  The Bank said: “Inflationary pressures in the Swedish economy are low. The economic outlook in Sweden has weakened as a result of developments abroad. In order to stabilise inflation around 2 per cent and resource utilisation in the economy around a normal level, the Executive Board of the Riksbank has decided to cut the repo rate by 0.25 percentage points to 1.50 per cent. The repo rate is expected to remain at this level until some time in 2013.”

The Riksbank previously also cut the rate by 25 basis points at its December meeting last yer, while the bank last increased the benchmark repo rate by 25 basis points to 2.00% at its July meeting, after also increasing by 25 basis points at its April meeting in 2011.  Sweden reported annual inflation of 2.3% in December, 2.8% in November, down from 3.2% in September, 3.4% in August, 3.3% in July, 3.1% in June, and 3.3% in May, the same as April, and up slightly from 2.9% in March; while also above the Riksbank’s inflation target of 2.0%. 

Sweden’s economy expanded 1.6% q/q in Q3 (0.9% in Q2, 0.8% in Q1), placing annual GDP growth at 4.6% (4.9% in Q2, 6.4% in Q1).  The Swedish Krona (SEK) has weakened about 5% against the US dollar so far this year, while the USDSEK exchange rate last traded around 6.77.

S&P Upgraded Ratings on the State of California

S&P revised California’s ratings outlook from Stable to Positive today, just in time before the state auctions its $2B general-obligation bonds. S&P affirmed the state’s A- long-term and underlying ratings on $73B of general obligation debt.S&P said that California would receive an even higher rating if the state’s revenue can come closer to the projected number in Governor Jerry Brown’s budget. Governor Brown is seeking for additional tax revenue sources, including a proposal that would raise personal income taxes on anyone with an annual paycheck of more than a quarter million dollars. California faced deep cuts in education in the past year, but the state is looking for ways to not cut this area further.

US Reports for the Day


When risk aversion increase hugely firmly endorsing the low-yielding dollar, who needs to see U.S. economic reports? Concerns on a possible Greece default dragged EUR/USD 125 pips from its 1.3192 intraday high, while USD/CHF also jumped by 29 pips to .9233.

As seen several times over the past weeks in relation to the Greek debt problem, investors got frustrated over the lack of solid progress in Greece’s possible bailout fund. Critically we can’t understand the use of Jean Claude Junker, President of the Eurogroup, saying that there’s progress when markets aren’t actually seeing any? The frustration weighed on high-yielding currencies across the board, which helped boost the low-yielding dollar.

Good thing the investors were focusing on the euro zone because the U.S. economic reports certainly didn’t show anything to be proud of either as no trade worthy reports exited the US today as predicted.

Though the Empire State manufacturing index came in at a better-than-anticipated reading of 19.5 in February, the capacity utilization rate missed expectations by 0.1% at 78.5% in January. Not only that, the TIC long-term purchases data showed that demand for long-term U.S. financial assets dropped sharply in December, as there’s only a $17.9 billion demand from November’s $61.3 billion figure.

The latest FOMC meeting minutes didn’t do any help either, as it told us nothing we don’t already know. Aside from repeating Big Ben’s frustration over the slow employment and economic growth, some FOMC members also see more quantitative easing in the future if economic data continue to disappoint expectations.

Speaking of economic data, we have a couple hitting us today, starting with the building permits, PPI, initial jobless claims, and housing starts all released at 1:30 pm GMT. After that, we’ll see the Fed Chairman make a speech in Arlington, which will be followed by the release of the Philly Fed manufacturing index at 3:00 pm GMT.

These reports today are certainly tradable so it will be wise to stick around. Follow up on the euro zone too!

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News and analysis are produced throughout the day by our in-house staff.
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