Gold Market Prices Regain $1600, Italy "May Also Need Bailout", Argentina Planning to Change Dollar Debts to Pesos - 12 June 2012

Bullion prices on the wholesale Gold Market rallied back above $1600 per ounce shortly before Tuesday's US trading, having failed to breach that level in the earlier Asian session, while European stock markets also ticked higher after a quiet morning's trading.

A day earlier, gold briefly rose above $1600 on Monday following the news that Spain will borrow up to €100 billion to rescue its banks, but along with stocks and the Euro gold failed to hold those gains.

Silver Prices meantime jumped to $28.94 per ounce, a 1.5% gain on the week so far, while commodity prices reversed earlier losses.

Earlier on Tuesday, Indian dealers reported flat trading, with one citing traditional gold buyers' lack of spare cash.

"Farmers are not buying as it is their sowing time," said Ketan Shroff, director at Pushpak Bullion, speaking to news agency Reuters.

Away from the Gold Market, Spanish 10-Year government bond yields rose to their highest level this month Tuesday morning, breaching 6.6%.

"There's a risk that Spain may be downgraded," reckons Alessandro Giansanti, senior rates strategist at ING in Amsterdam.

"There are still concerns about the seniority of the outstanding government debt after the bailout, and that means if you want to invest in the bond you need a higher risk premium to compensate."

Ratings agency Moody's last week set out a case for a possible Spanish downgrade as a result of any bailout, citing the experience of private sector bondholders who were obliged to take losses in Greece's debt restructuring in March.

"The debts of Euro area sovereigns that are dependent upon funding support from official sources represent noninvestment grade risks," said a Moody's statement released Friday, the day before it was confirmed Spain would seek a rescue deal for its banks.

"Future support – particularly if likely to be needed for a sustained period – would likely be made conditional on loss sharing with private investors or in extremis withdrawn altogether."

Elsewhere in Europe, yields on Italian 10-Year bonds hit five-month highs this morning.

"It may be that, given the high rates Italy pays to refinance on markets, they too will need support," said Austrian finance minister Maria Fekter Monday night, although by Tuesday morning Fekter said she sees no sign that Italy will make a bailout request.

Every country in the European Union should agree to have their large banks supervised by a single cross-border supervisor, according to European Commission president Jose Manuel Barroso.

"There is now a much clearer awareness among European member states about the need to go further in terms of integration," said Barroso Monday, in an interview with the Financial Times.

The Commission last week published plans for a so-called banking union, which would include pan-European deposit insurance, funded by participating banks, as well as greater supervision of banks across the 27-member EU.

Britain's chancellor George Osborne however has said the UK will not be part of such an arrangement, while Germany's central bank has also expressed opposition to the idea.

On the currency markets, the Euro hovered around $1.25 Tuesday morning, 1.7% up on the two-year low hit at the start of the month.

The Gold Price in Euros meantime spiked to €41,249 per kilo (€1283 per ounce), 0.8% up on where they started the week.

"Gold is going up, down or sideways dependent on what is going on in the Euro/Dollar rate," reckons Nic Brown, head of commodities research at investment bank Natixis.

In Buenos Aires meantime Argentina's president Cristina Kirchner has submitted draft legislation to enable US Dollar-denominated debts to be paid in Pesos, the Wall Street Journal reports.

"There is a lot of speculation about supposed plans to 'Pesofy' the economy," says one Buenos Aires-based trader.

It is not clear whether the proposed legislation will be applied retroactively, or if it will apply to government debt. In August, Argentina is due to make a $2.2 billion payment on so-called Boden bonds, which were issued as part of its 2002 debt restructuring.

An unofficial exchange rate for so-called 'Blue Dollars' has emerged in Argentina. The government's interior minister warned last week that discussing the unofficial rate was "an illegal act".

Kirchner's bill carries echoes of a move by Vietnam's central bank last month to restrict lending in currencies other than the Dong. Vietnam, another country whose economy has seen so-called 'Dollarization', has also introduced various laws aimed at regulating its domestic Gold Market, including banning the use of gold as money.

تابع القراءة

Gold Prices "Just Tracking the Dollar", Spain Bailout Could "Start Small and End Big", Chinese Gold Investment "To Rise 10%" - 11 June 2012

Gold Prices fell back below $1600 per ounce Monday morning in London, after briefly rallying above that level in Asian trading, as stocks and the Euro also began the week strongly and US Treasuries fell following news that Spain is to receive a bailout.

Silver Prices also jumped as Asian markets opened, before they too traded lower, falling to around $28.70 per ounce ahead of the start of US trading.

Euro Gold Prices by contrast rallied shortly before US open, climbing to €40,880 per kilo (€1271 per ounce) as the Euro gave back most of its early gains against the Dollar.

"Gold seems to be primarily tracking one trend, namely the trend in the US Dollar," says a note from Citi.

"If an event in Europe causes the US Dollar to weaken, gold is likely to rise. If it causes the US Dollar to strengthen, gold will likely fall."

The Eurogroup of single currency finance ministers confirmed Saturday that Spain will ask to borrow up to €100 billion to fund restructuring of its banking sector, ahead of forthcoming stress tests of Spanish financial institutions.

In return, a Eurogroup statement said, Spain should focus on "specific reforms targeting the financial sector". There was, however, no mention of fiscal reforms as a condition of lending, in contrast with the bailouts of Greece, Ireland and Portugal.

"The Eurogroup notes that Spain has already implemented significant fiscal and labor market reforms," the statement said.

"This is pre-emptive action," said Olli Rehn, European commissioner for economic and monetary affairs, speaking on Sunday.

"This is a very clear signal to the markets, to the public, that the Eurozone is ready to take determined action."

Yields on 10-Year Spanish government bonds however remained above 6% Monday morning, rising above 6.2% after an initial drop.

"The burden of recapitalizing insolvent banks or loss-making acquisitions of solvent banks will fall on Spanish citizens," says Karl Whelan, economist at University College Dublin.

"This weekend's announcement may well end up shutting Spain out of the sovereign bond market."

Spanish banks have suffered as a result of loans to Spain's property market going bad, and may need to put aside up to €155 billion to cover losses, according to an estimate from analysts at Credit Suisse, who add that a further €94 billion in losses may stem from non-property lending.

"We also know that the Spanish regions are going to need a lot more funding than has been assumed," adds Helen Haworth, London-based head of European interest rate strategy at Credit Suisse.

"There is still no buyer of Spanish debt beyond the domestic investor base, which is basically the Spanish banks."

"The key is to look at the reaction of investors and see if capital flight stops," adds Jose Carlos Diez, economist at research firm Intermoney in Madrid.

"If the process doesn't stop, there will be more funding problems and what we will see is a bailout that is starting small become a big one."

Spain's central bank revealed last month that €97 billion left the country in the first three months of the year.

Elsewhere in Europe, yields on 10-Year Italian government bonds breached 6% Monday morning, higher than where they ended last week.

"The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain," says Nicola Marinelli, portfolio manager at Glendevon King Asset Management in London.

"This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds."

Both Spain and Italy are guarantors for the lending capacity of the European Financial Stability Facility and European Stability Mechanism, the bailout funds that will fund the Spanish bank rescue package.

Ahead of this weekend's elections, two of Greece's left-of-center parties, Pasok and Democratic Left, have proposed plans that would form the basis of a unity government, reportedly borrowing heavily from the policies of the Coalition of the Radical Left (Syriza).

Syriza, which has expressed opposition to Greece's bailout deal, and the pro-bailout New Democracy party are the two parties currently leading in the polls.

Over in China, Gold Investment demand could rise by more than 10% this year, according to a senior figure at the Industrial and Commercial Bank of China.

"Investors here want to hold part of their assets in gold to hedge for the risks, especially now that the financial crisis has evolved into a sovereign crisis," says Zheng Zhiguang, general manager at ICBC's precious metals department.

"It's necessary for individual, institutional or even government investors to hold gold when the value of money is decreasing at a time of possible quantitative easing or excessive money-printing practices."

ICBC announced last month that it aims to become Asia's first market maker in London's gold market.

Chinese consumer price inflation meantime eased to 3.0% last month – down from 3.4% a month earlier, according to official data published Saturday. Last year, China's official CPI inflation hit a 2011 high of 6.5% in July.

In New York meantime, the difference between bullish and bearish Gold Futures and options contracts held by traders on the Comex exchange – the so-called speculative net long – rose 2.8% in the week ended last Tuesday, figures published late Friday by the Commodity Futures Trading Commission show.

The spec net long rose above a notional equivalent of 400 tonnes of Gold Bullion for the first time since the start of May, after Gold Prices rallied above $1600 an ounce the previous Friday.

"The sharp increase was largely the result of speculative longs being added, with a slight decrease in speculative shorts also contributing to the overall improvement," says Standard Bank commodity strategist Marc Ground.

تابع القراءة

German Bonds "Not Behaving Like Safe Haven" as Spain Yields Rise Further, Rupee Gold Prices Set New Record - 14 June 2012

Gold Prices spiked to $1627 per ounce shortly before Thursday's US session – their highest level this week – immediately after the publication of US economic data.

Silver Prices by contrast continued to trade sideways, hovering around $29 an ounce – around 1.6% up on where they started the week.

US consumer price inflation fell to 1.7% last month – down from 2.3% in April – according to official figures published Thursday. This week's initial jobless claims meantime were 386,000 higher than many analysts expected.

A day earlier, official data showed the producer price index, regarded by many as an indicator of commodity price inflation, fell 1.0% in May, while retail sales were down 0.2%.

The Federal Open Market Committee meets next Tuesday and Wednesday to decide on any changes to US monetary policy.

"Once there's evidence that the policymakers on the monetary side are going to have to release stimulus, we should see rising interest in gold and silver," said Jeremy Friesen, Hong Kong-based commodity strategist at Societe Generale, speaking before Thursday's US data was released.

"We feel that [a third round of quantitative easing] is still unlikely at present," counters Marc Ground, commodities strategist at Standard Bank, in a note this morning.

"The best prospect for Fed monetary accommodation coming from an extension or "Operation Twist" and perhaps pushing out their expectations of when rates would be hiked."

Earlier on Thursday, Gold Prices traded within a $5 range around $1620 an ounce throughout London's morning session, while stocks and commodities traded lower during following more negative ratings action in the Eurozone.

Ratings agency Moody's last night cut its sovereign ratings for Spain and Cyprus. Spain was cut three notches to Baa3 – one notch above junk – while Cyprus fell further into junk territory when its rating was cut to Ba3.

"Moody’s believes that the debts of Euro area sovereigns that are fully dependent upon official sources to fund their borrowing requirements represent speculative-grade risk," said a statement from the ratings agency.

The Eurogroup of single currency finance ministers confirmed on Saturday that Spain will borrow up to €100 billion from Eurozone rescue funds to finance its banking sector restructuring.

Spanish 10-Year bond yields this morning came within touching distance of the 7% mark, hitting a fresh Euro-era high at 6.998%.

Italy meantime successfully auctioned €4.5 billion in government bonds of varying maturities. Borrowing costs however were higher than last month. The gross yield on three year bonds for example rose to 5.3%, up from 3.91% in May.

Yields on German government debt meantime continued their recent rise Thursday, breaching 1.5% – up from an all-time low of less than 1.13% at the start of the month.

"All eyes are on Germany," Chancellor Angela Merkel told the German parliament this morning, adding that the Eurozone crisis is likely to dominate this weekend's G20 summit.

"[But] Germany’s power is not infinite...We must all resist the temptation to finance growth again through new debt."

"German bund yields [are this morning] behaving more like periphery bonds rather than a safe haven," says a note from UBS, pointing out that German bond yields have been rising faster than those on UK government debt.

"Of course, it is too early to make any conclusions about German bonds losing their safe-haven value...but such a scenario, wherein bunds lose some of their safety appeal, would mean investors would be on the lookout for new 'secure' places to park their money, and given the much-reduced list of alternatives, gold would be one of the top options."

Based on London Fix prices, the Gold Price in Euros rose to within 5% of its all-time high on Wednesday, dipping slightly to €1289 per ounce at this morning's fixing.

On the currency markets, the Euro traded sideways Thursday morning around $1.256.

"The Euro has been relatively stable as we head into [this Sunday's] Greek election and that will dictate market direction next week," reckons Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi.

"The situation in Europe," Federal Reserve chairman Ben Bernanke told Congress last week, "poses significant risks to the US financial system and economy and must be monitored closely."

"As always, the Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate."

Bernanke is due to give a press conference next week following the FOMC meeting on Wednesday.

Switzerland's central bank meantime repeated that it will buy "unlimited quantities" of foreign exchange in order to prevent the Swiss Franc rising above its peg to the Euro at SFr 1.20.

The Swiss National Bank today announced it is keeping its interest rate on hold at 0.0%.

"In the foreseeable future, there is no risk of inflation in Switzerland," said a statement from the SNB.

Over in India, traditionally the world's biggest source of private demand to Buy Gold, newspapers report Gold Prices in Delhi hit a new all-time high of Rs 30,550 per 10 grams Thursday, with some dealers citing buying by gold jewelers ahead of the upcoming marriage season.

Dealers elsewhere in Asia however reported "sluggish" demand, according to newswire Reuters.

"June is a quiet month for jewelers' demand," says Dick Poon, precious metals manager at bullion refiner Heraeus in Hong Kong, adding that investors are only Buying Gold "on dips".

تابع القراءة

Gold Price Jumps Again as Spanish, Italian Bonds Undo €1.1 Trn LTRO, But Still "Rangebound" Below $1640 - 13 June 2012

The Gold Price rose again as New York trading began on Wednesday, extending yesterday's 1.8% jump to reach $1620 per ounce as the Euro currency held flat but European stock markets slipped with commodity prices.

Silver Bullion recovered an earlier slip to trade just shy of $29.00 per ounce.

Spanish borrowing costs rose to new Euro-era highs at 6.73% for 10-year debt, while Italian bond yields also rose to a 6-month record, unwinding the effect of €1.1 trillion in LTRO loans made by the European Central Bank last winter.

Rome today cut to €6.5 billion the amount of new 1-year debt being sold at auction, but it still had to pay investors 3.97% per year in interest – well over one-point-five percentage points more than at the last time of asking in May.

"If Euro bond yields continue to escalate," says one Gold Dealer in Asia, "gold could remain [well] bid."

Weaker-economy Eurozone bond yields have now reached or breached levels seen before the European Central Bank lent commercial banks €1.1 billion in 3-year loans starting December last year.

The Gold Price for Euro investors today jumped €41,500 per kilo, a level first reached in mid-August 2011 and approached this week on what analysts variously called "central bank...Chinese [or] Indian...private banking [or] electronic buying."

"Who knows?" asks one precious metals strategist in a note. "Apparently no one in the market."

Tuesday was "the 7th consecutive day of alternating between 'Up' and 'Down' days" in the Gold Price, notes Russell Browne at market-making bullion bank Scotia Mocatta.

"From a price perspective, the 1559 support is key ahead of 1528 [while] 1640 is the topside trigger for a move higher."

"Consolidation is ongoing," agrees Axel Rudolph at Commerzbank in Luxembourg, also saying the Gold Price "remains essentially range bound within the confines of its major 1532 support zone...and the 1641 current June peak."

Buying commodities such as gold "at current lows" has "always been profitable" over the last 18 months, said Kevin Norrish, managing director of commodities research at Barclays, speaking in Johannesberg, South Africa today.

"A break below [current levels] would be a major change" to the long-term trend, he said.

After Finnish finance minister Jutta Urpilainen said Helsinki wants collateral for its portion of the €100 billion credit line agreed with the Spanish government to support its banking sector last weekend, "Rumors about backing for the EFSF [Eurozone stability fund] could prove to be bearish news for the Gold Price," says a note from Swiss refining and finance group MKS, "as countries may have to use their gold reserves if they run out of other assets to post, should gold be allowed as collateral."

Over in the United States, says a new presentation from Societe Generale's Cross Asset Research team, "The prospect of the Fed launching QE3 soon now that the US economy appears to be slowing [means] gold should rally.

"We see scope for the Gold Price to trade back above $1700 soon, but we are no longer forecasting new all-time highs," says SocGen, pointing to weak jewelry demand.

"A significant supply surplus" requires what the banks' analysts call "investors and speculators" to buy almost 2,000 tonnes both in 2012 and 2013 to balance the market.

Meantime in the Eurozone, withdrawals from Greek banking deposits "have seen a marked increase" according to un-named bankers speaking to Reuters.

Daily outflows from ATM cashpoints, investment and Greek bank accounts to other Eurozone member states now total some €500-800 million per day, say the sources.

"Despite the [ Gold Price ] push above $1600," says today's note from Standard Bank's commodity analysts, "physical demand remains fairly robust."

However, the bank adds, the premium over benchmark London prices asked by Shanghai dealers "came off slightly" overnight, indicating a market "that is cautious on gold and unwilling to add long positions."

World #1 gold consumer India could see its credit status cut to "junk", said the Standard & Poor's rating agency Monday, owing to the slow pace of economic reforms and yawning

Taking the Rupee back towards all-time record lows against the US Dollar, "this has resulted in near record prices for gold in Rupee terms," says Standard Bank, "and a consequent fall-off in physical buying from India."

تابع القراءة

Weak Euro "Weighing on Gold Price", Eurozone Growth Plan "Based on Funny Money", Dollar "Scarcity" Seen Supporting US Currency - 18 June 2012

The Gold Price hovered around $1620 per ounce for most of Monday morning's London trading – slightly below where it ended last week – while stocks and commodities were also broadly flat, after initial rallies that followed yesterday's Greek election result quickly petered out.

The Silver Price drifted lower to $28.41 per ounce by Monday lunchtime in London – a 1% drop on Friday's close – while US, UK and German government bond prices all saw gains ahead of the week's Federal Reserve policy meeting.

The Euro meantime briefly broke above $1.27 for the first time in nearly a month, before dropping by more than one cent by lunchtime.

"There is a downward bias [in gold and silver]," reckons marc Ground, commodities strategist at Standard Bank.

"Euro weakness weighs on precious metals as markets come to the realization that despite the Greek election resulting in a 'positive' outcome...the underlying problems facing the Eurozone are still very much present."

The pro-bailout New Democracy party is seeking to form a coalition government after narrowly beating the anti-bailout Syriza in Sunday's Greek elections.

"The result showed people want the Euro," one senior New Democracy official told newswire Reuters.

"But society remains divided. Syriza will be a militant opposition, possibly complicating the new government's efforts."

"Will [New Democracy's narrow victory] be the wake-up call [Eurozone] policymakers have needed to show that their policies are going wrong?" asks Standard Bank currency strategist Steve Barrow.

"Or [will they] see the Greek result a vindication of their approach? Unfortunately, we think it will be the latter and that keeps us bearish of the Euro."

European stock markets were broadly flat by Monday lunchtime in London following a short-lived rally in early trading.

On the bond markets, Spanish 10-Year bond yields set a fresh Euro-era high this morning, hitting 7.16%. Yields on Italian 10-Year bonds also spiked, climbing back above 6%.

Elsewhere in Europe, French president Francois Hollande – whose Socialists won a majority in yesterday's parliamentary elections – has sent fellow European leaders plans for a €120 billion 'growth pact', French newspaper Le Journal du Dimanche reported Sunday.

The €120 billion would reportedly include €10 billion from the European Investment Bank, whose activities include stimulating small business lending and infrastructure investment. This €10 billion would then be "leveraged", the report says, to €60 billion of private investment raised on international markets.

"No one has ever explained how €10 billion becomes €60 billion," says one senior European Union diplomat quoted by the Telegraph.

"This is funny money and risks politicizing an institution [the EIB] that works well because it is independent of the politicians and the dodgy Euro math that has fuelled the crisis."

Non-Eurozone leaders at the latest G20 summit, which begins today in Mexico, will "make the case" for further European fiscal and political integration as a way of bolstering monetary union, according to David Plouffe, senior adviser to US president Barack Obama.

G20 leaders "should encourage and support efforts made by Europe to resolve [the debt crisis] and send a signal of confidence to the market," China's president Hu Jintao said over the weekend.

"We are waiting for Europe to tell us what it is going to do," added Robert Zoellick, president of the World Bank, speaking on Sunday.

"The danger we're creating is the danger of policymaking that is increasing uncertainty and making markets more nervous, which has a negative feedback loop."

On the currency markets, private sector investors are facing a scarcity of US Dollars as a result of heavy buying by central banks aiming to build up their reserves, according to a report from Morgan Stanley.

"The market often assumes that people are long Dollars, but many of those Dollars are held by central banks, which are unlikely to move out," says Morgan Stanley's head of European currency strategy Ian Stannard in London.

"That leaves us with the private sector, which is short. In an environment where we see a global slowdown, the Dollar will be well supported."

The US Dollar Index (DXY), which measures the Dollar's strength against a basket of major currencies, hit its highest level for nearly two years earlier this month.

On Monday morning, the DXY was trading around 10% higher that it was when the Dollar Gold Price set an all-time record last September. Over the same period, Dollar Gold Prices are down around 15%.

Last November, six of the world's major central banks undertook coordinated action to lower the cost to banks of borrowing Dollars, in order to "provide liquidity support to the global financial system".

In the US, the Federal Open Market Committee is expected to extend its maturity extension program Operation Twist, which aims to lower longer-term interest rates, when it meets tomorrow and Wednesday, a number of analysts report.

"A short-term extension of Operation Twist is the most likely" says a note from Barclays.

People who Buy Gold are investing in a "dead asset", Indian finance minister Pranab Mukherjee told a television awards ceremony over the weekend.

Mukherjee, who has twice announced increases in gold import duties this year, urged India's financial advisers to "spread financial literacy" and encourage investment in other assets, adding that there is a need for India to develop wider and deeper securities markets.

Over in China, which looks set this year to overtake India as the world's largest source of private gold demand, property prices in major cities fell for the eighth month running last month, Reuters reports.

تابع القراءة

Central Banks "Should Start Easing Soon", BoE Calls For "Large Sterling Depreciation", Greek Vote "Should Support" Gold Bullion - 15 June 2012

EARLIER REPORT

Gold Bullion prices held above $1620 per ounce during Friday morning's London trading – a gain of nearly 4% for the month so far.

Stock markets and major government bonds rallied, with analysts speculating on the prospects for further monetary stimulus, including a possible third round of quantitative easing (QE3) from the Federal Reserve, whose policymakers meet next week.

Silver Bullion meantime hovered around $28.70 per ounce – 3.6% up in June so far, but only 1.1% for this week – while broad commodities gained, with oil edging higher despite Opec's decision Thursday not to lower its production ceiling.

Heading into the weekend, Gold Bullion looked set for a weekly gain of around 2% by Friday lunchtime in London.

Some gold traders in Asia however have reported "sluggish" demand for physical bullion this week.

"Our recent call suggesting that Gold Prices had room to rally," says a note from French investment bank Natixis, "was predicated more upon the prospect of further US easing...it is likely [though] that some of the current weakness in US economic data is linked in part to the ongoing deterioration in the European outlook."

"Not many [traders] will dare take on fresh long [positions] ahead of the weekend," reckons Andrey Kryuchenkov, analyst at VTB Capital in London, citing gold's "peculiar behavior recently".

"We should stall near this week's highs below $1630, with all attention on Greece, and then the G20 summit next week."

"The next big event in the gold world is likely to be the Greek election," agrees a note from HSBC.

"Gold may be caught between the election and US monetary expectations."

Greek voters go to the ballot box this Sunday, with Syriza, which has said it rejects the conditions attached to Greece's bailout, neck-and-neck with New Democracy according to the most recent opinion polls.

"Whatever the outcome in Europe, it will likely be supportive for gold," says Neil Gregson, who manages JPMorgan Asset Management's Natural Resources Fund.

"We've still got the possibility of QE3 in the US, which would be good for gold."

Here in London, Britain's chancellor George Osborne and Bank of England governor Mervyn King last night announced £100 billion of stimulus measures, including a "funding for lending" program aimed at cutting banks' borrowing costs in return for promises to lend to the non-financial sector.

"It is very hard to argue that monetary policy, in all its forms, has run out of road," Osborne told an audience of financial services professionals at the City of London's Mansion House.

"The government, with the help of the Bank of England, will not stand on the sidelines and do nothing as the storm gathers."

"Businesses and households are battening down the hatches to prepare for the storms ahead," added King, speaking later at the same event.

"The result is that lower spending leads to lower incomes and a self-reinforcing weaker picture for growth."

"It is clear from Governor King's speech," says Barclays economist Simon Hayes, "that he has become more gravely concerned about the economic outlook, even over just the past few weeks...[implying] a much increased likelihood that the [Monetary Policy Committee] will sanction more quantitative easing."

While the "funding for lending" scheme should help lower borrowing costs, "the core problem remains" says Graeme Leach, chief economist of the Institute of Directors.

"Companies alarmed by the Euro crisis will not be eager to borrow, regardless of the cost."

King also stated in his speech that "the big picture was, and remains the need to generate recovery while balancing our economy, supported by a loose monetary policy and a large depreciation of Sterling...and a gradual but steady reduction in the [government's] structural budget deficit."

Since the onset of the crisis in August 2007, the Pound has fallen nearly 25% against the Dollar. Sterling Gold Prices meantime have risen more than 200%.

Over in Frankfurt, European Central Bank president Mario Draghi said Friday the ECB "will continue to supply liquidity to solvent banks where needed".

Hours earlier, King said that the Bank of England "will provide banks with whatever liquidity they require given the prospect of turbulence ahead".

Japan's prime minister meantime said Friday that recent gains in the Yen do not reflect Japan's fundamentals, adding that he will relay his worries about currencies and the Eurozone crisis at next week's G20 meeting.

"[European] growth is slumping," says Friday's note from Standard Bank currency analyst Steve Barrow in London.

"Inflation is falling and there's a possible need to react to the disintegrating European Monetary Union...the Fed, the ECB, the Bank of England, the Bank of Japan and China's [central bank] should all ease policy – and pretty soon."

Elsewhere in London, Hong Kong Exchanges and Clearing Ltd has said it will buy the London Metals Exchange for $2.15 billion.

"The deal will make Hong Kong Exchanges one of the major metal exchanges in the world," says Charles Li, chief executive at Hong Kong Exchanges.

The volume of Gold Bullion held to back shares in the SPDR Gold Trust (GLD), the world's largest Gold ETF, rose by just over three tonnes Thursday, hitting its highest level this month at 1277.4 tonnes, though it remains around 3% off the all-time record set two years ago.

The tonnage of Silver Bullion in the iShares Silver Trust (SLV), the world's biggest Silver ETF, remained static Thursday at just over 9696 tonnes.

British pawnbroker Albermarle & Bond meantime have citing falling Gold Prices as contributing to a profits warning issued today, with fewer people opting to pawn or sell scrap Gold Bullion such a jewelry.

تابع القراءة

Fed "Moving Gold Price More Than Europe", Twist Extension "Could Be Insufficient", Spain's Borrowing Costs Shoot Higher - 19 June 2012

The Gold Price hovered around $1630 per ounce Tuesday morning in London – in line with where it started the week – while stocks and commodities were also broadly flat ahead of this month's Federal Reserve policy meeting which begins today.

The Silver Price traded in a tight range just below $29 an ounce – 1.7% up on Monday's low.

Over in India, traditionally the world's biggest gold buying nation, local press report that the Rupee Gold Price set a fresh record in Delhi Tuesday, as the Rupee fell against the Dollar on international currency markets.

"There has been very light buying from India, but it's really quiet there," says one Singapore-based dealer, adding that there has been a pickup in scrap Gold Bullion sales from Thailand.

"I guess there's a kind of wait-and-see attitude because there's a lot of uncertainty in the market."

"For the moment," adds Lynette Tan, investment analyst at Phillip Futures in Singapore, "we expect policy decisions from the Fed to influence the Gold Price more than risk appetite linked to the Euro crisis."

The Federal Open Market Committee meets today and tomorrow to decide any changes to US monetary policy.

"We would be quite surprised if we saw no [Fed policy] easing this week," says a note from Jan Hatzius, chief US economist at Goldman Sachs.

"We believe that an extension of Operation Twist could well be insufficient on its own and could thus be followed by additional easing action before long," added Hatzius, suggesting the Fed could consider a "sufficiently large program" of mortgage-backed securities purchases.

However, "the agency MBS market might have more trouble accommodating the Federal Reserve this time" says a note from Barclays. The Barclays economists point out that the Fed will be keen to avoid its actions creating "dislocations" in markets, meaning it could include more US Treasury bond buying in any new round of quantitative easing.

Here in Europe, Spain saw its borrowing costs rise to over 5% for one year – up from 1.985% last month – when it auctioned €2.4 billion of 12-Month bills on Tuesday. A further €639 million of 18-Month bills were sold at an average yield of 5.1%, up from 3.3% at the last similar auction.

Benchmark Spanish 10-year yields eased slightly following the auction, but remained above 7% by Tuesday lunchtime in London.

European leaders announced last week that Spain plans to borrow up to €100 billion from Eurozone rescue funds to finance the restructuring of its banking sector, with stress test results due to be published later this week.

"It is not at all clear whether Spain's rescue package will help bring about the definitive clean-up of its banking sector," says Nicholas Spiro, managing director of consultancy Spiro Sovereign Strategy, which specializes in sovereign credit risk.

"Spaniards, like the markets, fear the €100 billion credit line is the prelude to a full bailout accompanied by much stronger conditionality."

Elsewhere in Europe, investor sentiment in Germany has turned decidedly bearish in recent weeks, according to the widely-followed ZEW Indicator of Economic Sentiment. The indicator has fallen by 27.7 points – the biggest fall since 1998 – from 10.8 last month to -16.9.

The International Monetary Fund announced Monday that the amount of additional funding pledged by governments has risen from $430 billion to $456 billion.

The additional funds "Will be drawn only if they are needed as a second line of defense", IMF managing director Christine Lagarde said.

Eurozone governments "will take all necessary policy measures to safeguard the integrity and stability of the Euro area, including the functioning of financial markets and breaking the feedback loop between sovereigns and banks", according to a leaked draft of the communique from the G20 meeting in Mexico, which continued Tuesday.

"Trader concerns are being confounded by the apparent idleness at the G20," says one trader quoted by the Wall Street Journal.

"What was hoped would be a definitive meeting of the world's most powerful economies devising a solution to the slowing global growth story, unfortunately looks to be plagued with the same sort of inertia that led Eurozone policy makers to stand by as the crisis mushroomed."

Here in the UK meantime, consumer price inflation eased to 2.8% last month – down from 3.0% in April – according to consumer price index data published Tuesday. This is the first time CPI inflation has fallen below the Bank of England's upper tolerance of 3% since 2009.

Across the Atlantic, CME Group, which operates New York's Comex exchange, has announced plans to allow holders of short-dated gold options to exercise into Gold Futures positions at expiry, with effect from the start of next month – though CME tells Reuters it has no plans to extend this to longer-dated instruments. Currently, all gold options holders are only able to settle for cash.

تابع القراءة

Gold Price Falls Post-Fed But "Shored Up" by Fresh Central-Bank Buying as German Denies New Euro "Blueprint" Solution - 21 June 2012

The Gold Price fell further Thursday morning in London, hitting an 8-session low of $1587 per ounce following the US Federal Reserve's "no change" decision yesterday on interest rates and new quantitative easing.

Major-government bond prices pushed higher, but the Euro currency retreated almost 1¢ from its post-Fed high to trade back down at $1.2650.

Silver Prices hit a new low for the month of June at $27.70 per ounce, while commodity indices dropped to 19-month lows and US crude fell to 7-month lows beneath $80 per barrel.

European stock markets also fell, with London's losses led by mining equities.

"Achieving a durable and prompt exit from the Euro area crisis, as well as avoiding the US 'fiscal cliff' [due start-2013] is crucial for sustained global recovery," said a new report from the International Monetary Fund on the outlook for the G20 group of large economies.

First estimates for China's manufacturing activity in June showed an eighth month of contraction on HSBC's purchasing manager' index – the longest such stretch since 2008.

Germany's PMI joined the rest of the Eurozone in showing a sharp contraction in both manufacturing and the services sector.

With the Gold Price slipping 2.5% for the week so far, "Hats off to the players in the gold market," says Edward Meir for INTL FC Stone, "who had the sense not to join in on the rallies [in commodities and equities] that were taking place" before the US central bank's Wednesday announcement.

"The high expectations in advance of the US Fed's meeting were priced out" of other asset classes, agrees Eugen Weinberg at Commerzbank in Frankfurt.

"[But] even without unconventional monetary policy," he adds in today's commodity note from the German bank, "central banks are currently shoring up the Gold Price...by diversifying their currency reserves and continuing to Buy Gold."

Russia's central bank bought another 14 tonnes of Gold Bullion in May, according to data from the Interfax agency Thursday.

That takes net purchases by the official sector to almost 150 tonnes for 2012 so far, based on data compiled by the World Gold Council market-development group.

"It is clear that BRICS countries have entered the stage when they can demand to be reckoned with," said Russia's deputy finance minister Sergei Storchak to reporters this morning, suggesting that Brazil, Russia, China, India and South Africa may launch a joint "anti-crisis" fund to challenge the IMF in Washington.

"It will be a parallel mechanism in addition to the IMF," said Storchak.

Between them, the so-called BRICS countries now hold over $4 trillion in central-bank reserves, including 2,650 tonnes of Gold Bullion – more than 8% of national gold reserves worldwide, and greater than all single hoards but the US and Germany's.

"Despite trading well through support in the low $1600s, gold managed to close with only a small loss on the day," says last night's report from bullion bank Scotia Mocatta.

"The bearish trendline off the March highs should provide resistance at $1632."

"Gold's dip below the $1600 level has confirmed our suspicion that the market was expecting something more [from the US Fed]," says today's analysis from Standard Bank in London, citing support for the Gold Price at $1585.

Any move in the Gold Price on news of a Spanish bank rescue "could be a knee-jerk move" Standard Bank adds, "given that markets have already discounted that Spain needs a bank bailout."

Madrid today enjoyed strong demand for €2.2 billion of medium-term debt sold at auction, but still had to pay investors record-high interest rates of 6.07% per year on 2017 bonds – up from 4.96% at last month's sale.

Set to announce his coalition cabinet in Athens on Thursday, new Greek prime minister Antonis Samaras will also ask Brussels to give Greece a further two years to meet its agreed government spending and debt targets, according to press reports.

Next week European Union president Herman Van Rompuy will present a "blueprint" for the Euro currency union to national leaders, according to un-named officials cited by Bloomberg.

The plan includes "jointly issued short-term bills, a debt- redemption fund and common banking supervision," says the newswire.

"There are no concrete plans that I know," German chancellor Angela Merkel said at a press conference in Berlin last night, "but there is the possibility of [the EU bail-out funds] buying government bonds on the secondary market.

"But that is a purely theoretical comment," she added – contracting Italian caretaker prime minister Mario Monti's earlier call for discussion on the issue.

"This is not a subject for debate right now."

تابع القراءة

Gold Prices Fall Ahead of Fed Decision, "Policy Gesture" Seen But No QE, France, Italy Call for Bond Buying with Rescue Funds - 20 June 2012

Gold Prices fell back towards $1600 per ounce ahead of Wednesday's US session – 1.5% down on the week so far – while stocks and commodities were broadly flat and US Treasury bonds fell, ahead of the Federal Reserve monetary policy decision due later today.

Silver Prices dropped to $28.08 an ounce – 2.2% down on last week's close.

As well as announcing its latest decisions on interest rate and asset purchases, the Fed will also publish policymakers' economic projections, while Fed chairman Ben Bernanke will give a press conference.

"We think Bernanke will talk up the Fed's readiness to act if required and there is a chance of a policy gesture – an extension to Operation Twist perhaps," reckons Nick Trevethan, Singapore-based senior metals strategist at Australian bank ANZ, referring to the Fed's program aimed at lowering longer-term interest rates.  

"But anybody looking for some sort of grand [quantitative easing] scheme risks disappointment," says Trevethan, adding that Gold Prices could fall as low as $1530 an ounce "if investors are really disappointed".

"Extending Operation Twist is the path of least resistance," agrees Josh Feinman, global chief economist at Deutsche Bank's asset management arm DB Advisors in New York.

"It would be an extension of something we have in place, so it would be more seamless, and it doesn't complicate exit strategies as much because it's not expanding the balance sheet."

European leaders meantime "will take all necessary measures to safeguard the integrity and stability of the [Euro] area," according to the official communiqué issued at the end of the G20 meeting Tuesday.

"The adoption of the Fiscal Compact [on government budget reforms]," the communiqué adds, "and its ongoing implementation, together with growth-enhancing policies and structural reform and financial stability measures, are important steps towards greater fiscal and economic integration that lead to sustainable borrowing costs."

The communiqué was issued hours after Spain auctioned 12-month bills at an average yield of more than 5%. Yield' on 10-Year debt eased slightly on Wednesday morning, dipping back below 7%.

Europe's major clearing house LCH.Clearnet  meantime has raised the margin clients must post against positions in Spanish sovereign debt. The margin on bonds with maturities of between 10 and 15 years, for example, will rise from 13.6% to 14.7%. The clearing house made a similar hike for Italian bond positions last November after yields on those bonds rose above 7%.

Eurozone bailout funds the European Financial Stability Facility and the soon-to-be-activated European Stability Mechanism could be used to buy sovereign bonds directly on the open market, according to a proposal made by Italian prime minister Mario Monti at the G20 summit.

"The idea is to stabilize borrowing costs," said Monti, "especially for countries who are complying with their reform agendas, and this should be sharply distinguished from the idea of a bailout."

French president Francois Hollande, who described yields of 7% on Spanish bonds as "not acceptable", expressed support for Monti's proposal.

"The EFSF already exists," said Hollande, who also repeated calls for joint debt issuance, a financial transaction tax, and for the European Central Bank to play a greater role in fighting the crisis.

"The ESM will soon exist...let's use them at the right moment and with the right dose."

German chancellor Angela Merkel is due to meet with Hollande and Monti, as well as Spanish prime minister Mariano Rajoy, in Rome on Friday.

European leaders "need to deliver something" at next week's European Union summit, one of Merkel's aides told newswire Reuters Tuesday.

"We know the expectations for the EU summit are high," the aide said, "But in reality many countries have still not come to grips with the idea of moving towards greater fiscal integration. It's going to be very hard to deliver the big announcement."

Germany's Constitutional Court meantime has ruled that the German government gave insufficient notice to parliament of plans to set up the ESM, the permanent Eurozone bailout fund due to become active at the start of July. The Bundestag is due to vote on whether to ratify the ESM's creation next week.

Over in Athens, Greek politicians have agreed on the formation of a government, according to Evangelos Venizelos, the leader of Socialist party Pasok.

Pasok, which came third in Sunday's election, will form a government with other so-called pro-bailout parties, first-placed New Democracy and the Democratic Left, Venizelos said Wednesday.

Here in the UK, members of the Bank of England's Monetary Policy Committee "judged that some further economic stimulus was either warranted immediately or would probably become warranted", according to the minutes of the MPC's June meeting published Wednesday.

The minutes add that the MPC is "waiting to see how matters evolve" in the Eurozone before undertaking any action.

The number of unemployed in Britain meantime fell nearly 2% to 2.61 million between February and April, according to official data published Wednesday. In May, however, the claimant count – which measures the number of people claiming jobseeker's allowance – rose by 8100 to 1.6 million.

Gold Bullion dealers in India, traditionally the world's biggest gold market, continued to report quiet demand Wednesday.

"Customers are coming to the jewelry shops," says Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation.

"But now they've turned sellers rather than buyers."

Rupee Gold Prices in Mumbai set a fresh record on Tuesday, the Wall Street Journal reports. The Rupee has fallen 25% against the Dollar over the last 12 months.

تابع القراءة

Silver "Could Fall to $18", Weak Euro "Weighing on Gold Prices", Lagarde "Throws Down Gauntlet" to Merkel - 22 June 2012

EARLIER REPORT

Gold Prices fell as low as $1560 per ounce Friday morning, before recovering some ground by lunchtime in London, while stock markets also sold off and commodities were broadly flat.

Silver Prices meantime sank to a 2012 low at $26.64 an ounce – a 7.2% drop on last week's close.

"We believe a break of $26.00 has the ability to trigger liquidation of silver with it looking for $18.00," says the latest technical analysis note from bullion bank Scotia Mocatta.

Heading into the weekend, Gold Prices by Friday lunchtime looked set for their biggest weekly fall since the first week of March, having fallen 3.7% since the start of Monday's trading.

On the currency markets, the Euro ticked lower against the Dollar, hitting its lowest level this week.

"A decline in the Euro may have contributed to a drop in Gold Prices," says HSBC precious metals analyst James Steel.

"Near- term momentum may take prices lower, but we believe it may create an attractive point of entry for gold."

The Dollar held onto yesterday's gains made following Wednesday's Federal Reserve decision not to launch another round of quantitative easing.

The Fed opted to extend Operation Twist, the maturity extension program whereby it aims to lower longer-term interest rates by selling shorter-dated government bonds and buying longer-dated ones.

The extension to Operation Twist could reduce liquidity in the short-term funding market, traders have told the Financial Times, since the Fed's System Open Market Account will have sold most of its short-dated Treasury debt by the end of this year. The Fed, they argue, will be less able to lend out short-dated securities at times of high demand, which have often coincided with periods of heightened market stress.

"[It is] a little unsettling for the repo market to no longer have SOMA lending as a backstop," says Michael Cloherty, head of US interest rate strategy at RBC Capital Markets.

"We do not believe that [the] extension of Operation Twist is sufficient, and expect further action from the Fed later this year" says a note on asset allocation from analysts at HSBC, who add that they "retain a very conservative strategic portfolio with a focus on US Treasuries and gold."

Here in in Europe meantime, stock markets extended losses into a second day this morning, after ratings agency Moody's last night announced it was downgrading 15 major global investment banks.

Moody's noted in a statement that "government support [for banks] is likely to become less certain and predictable over time".

Spain's banks meantime could face capital shortfalls of up to €62 billion in the event of adverse economic conditions, according to the results of stress tests published Thursday. The figure is based on potential losses of up to €274 billion, offset against expected earnings and provisions already made for losses.

The €62 billion potential shortfall is less than the €100 billion credit line Eurozone leaders have agreed to offer Spain to finance banking sector restricting.

The stress tests however did not consider the impact of losses on Spanish banks' government bond holdings, newswire Bloomberg reports.

Benchmark yields on Spanish government bonds, which set Euro-era highs earlier this week, ticked lower this morning, ahead of a meeting of a meeting between the leaders of the four biggest economies in the Eurozone.

German chancellor Angela Merkel headed to Rome Friday for talks with Italian prime minister Mario Monti, French president Francois Hollande, and Spanish prime minister Mariano Rajoy. Earlier this week, at the G20 summit, Monti suggested Eurozone rescue funds should be used to buy government bonds on the open market – a proposal supported by Hollande but rejected by Merkel.

Rajoy meantime said last week that he is "waging a battle" to persuade the European Central Bank to buy debt from Eurozone countries facing high borrowing costs.

"The viability of the European monetary system is [being] questioned," said International Monetary Fund head Christine Lagarde last night.

"A determined and forceful move towards complete European monetary union should be reaffirmed in order to restore faith."

Lagarde also called for recapitalization of weak banks, "with preferably a direct link between [bailout funds] and the banks, without going through the sovereign, in order to break the negative feedback loop that we have between banks and sovereigns."

"Christine Lagarde is throwing down the gauntlet," says one Eurozone official quoted by the New York Times.

If European leaders fail to agree measures at next week's European Union summit that calm the markets, "there would be progressively greater speculative attacks on individual countries, with harassment of the weaker countries," argues Monti in an interview carried by several European newspapers this morning.

"A large part of Europe would find itself having to continue to put up with very high interest rates...this is the direct opposite of what is needed for economic growth."

"Monti knows he has to get his ducks in a row on the European side," says James Walston, professor of politics at the American University in Rome, citing pressure on the prime minister from those parties that have so far backed him.

"Friday's summit is important for Monti in symbolic terms because it shows Italians that he is center-stage."

The Italian government agreed this week to move forward Friday's meeting, to enable Merkel to attend a football match at the  European Championships in Poland – where Germany play Greece tonight.

Over in India, traditionally the world's biggest Gold Bullion market, the postal service today offered a 6.5% special discount on Gold Coins to mark the festival of Pushya Nakshtrey.

Indian Gold Dealers have reported slow demand this week, with currency weakness contributing to record Rupee Gold Prices in recent days. Traders on Friday said the Reserve Bank of India stepped in to prevent the Rupee falling further, after it sank to a record low against the Dollar.

"For a while already we’ve seen weak Indian buying owing to a weaker Rupee and the usual seasonal decline we observe over this period," says Friday's note from commodities strategists at Standard Bank.

"South East Asian players have been doing well at picking up the slack but of late they have not."

تابع القراءة

Gold, Silver Steady Ahead of EU Summit Despite "Negative Forecast", Good Monsoon and Steady Rupee "Will Help Indians Buy Gold" - 26 June 2012

Prices to Buy Gold hovered just above $1580 per ounce throughout Tuesday morning's London trade, up around 0.6% on where they ended last week following gains in yesterday's trading.

Prices to Buy Silver traded in a tight range around $27.50 an ounce – 2.1% up on the week so far.

"After last week's bearish price action it is hard to get excited about a sustained rally [for gold]," says the latest note from technical analysts at bullion bank Scotia Mocatta.

"In our opinion," adds Commerzbank senior technical analyst Axel Rudolph, "gold has resumed its downtrend...we will retain this negative forecast while the Gold Price trades below the current June high at $1641."

European stock markets meantime edged slightly higher by lunchtime in London – following losses the previous day – while commodities were broadly flat and US Treasury bonds fell, as markets continued to focus on upcoming policy discussions in Europe.

On the currency markets, the Euro struggled to stay above $1.25 this morning, having fallen from one-month highs last week.

"If the US Dollar remains strong, then gold may easily move down a little bit," says one bullion dealer in Hong Kong.

"Sentiment in general is a bit mixed. If you have less money in your pocket, why should you Buy Gold? The only thing that people are buying for the time being is the US Dollar."

The European Council – which according to its website "defines the general political direction and priorities of the European Union" – has called for "greater pooling of decision making on budgets" across the Eurozone, ahead of the EU summit which starts this Thursday and concludes Friday.

"A fully-fledged fiscal union," it says in a report issued Monday, "would [ultimately] imply...the development at the Euro area level of a fiscal body, such as a treasury office."

The report, which is expected to form the basis for discussions at this week's summit, outlines "four essential building blocks" for greater European integration. As well as integrated budget setting, it calls for an "integrated financial framework" – including cross-border deposit insurance and bank resolution schemes – an "integrated economic policy framework" and stronger "democratic legitimacy and accountability".

The report also suggests the issuance of common debt instruments such as so-called Eurobonds "could be explored...in a medium term perspective".

"Steps towards the introduction of joint and several sovereign liabilities could be considered," the report says, "as long as a robust framework for budgetary discipline and competitiveness is in place."

German chancellor Angela Merkel yesterday described Eurobonds as "economically wrong and counterproductive".

"There is now a growing suspicion that Germany is simply not ready to accept the level of debt mutualization necessary to restore confidence and keep the single currency project alive," says Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy specializing in sovereign credit risk.

Cyprus became the fifth Eurozone nation to apply for a bailout Monday, following a decision by ratings agency Fitch to cut the country's credit rating to junk status. The Cypriot government aims to contain "spillover effects" from the Greek economy, to which Cypriot banks have "large exposure", an official statement said.

Over in Athens, Greece's new finance minister Vassilios Rapanos has resigned four days into his appointment, after he collapsed and was hospitalized Friday.

Ratings agency Moody's meantime has downgraded 28 Spanish banks, including Santander, following its decision earlier this month to cut Spain's sovereign rating to one notch above junk.

Over in India meantime, the Rupee continued to trade near all-time lows against the Dollar on Tuesday, despite moves a day earlier by the Reserve Bank of India aimed at boosting capital inflows, such as raising the limit for the amount of government bonds foreign investors can hold.

"These are just stop-gap arrangement," says Sonal Varma, economist at Nomura in Mumbai.

"What has the government done to reduce the fiscal deficit and curb the current-account deficit?"

"The major issues in India," adds Benoit Anne, managing director at Societe Generale in London, are the question marks about growth in the context of China being heavily scrutinized on the same topic, as well as the credibility of economic and financial policies."

Raising the amount of Indian government bonds foreigners can hold "is not a guarantee that foreign investors will rush in," Anne adds, "especially if the fundamental problems have not been addressed."

Rupee prices to Buy Gold have hit a series of record highs this month, as the Indian currency has fallen against the Dollar.

"For the past two to three months, there has been virtually no gold buying in India," says Krishna Kumar Nathani, managing director of Chennai-based consultancy Indiabullion.com.

"But if international prices were to retreat and the Dollar-Rupee holds at current levels, then I expect demand to pick up again."

"If we have good monsoon rains," adds Bombay Bullion Association President Prithviraj Kothari, "then gold demand could be anywhere between 750 and 800 metric tonnes this year."

India was the world's biggest gold buyer in 2011, with total Gold Bullion demand totaling 933.4 tonnes according to World Gold Council data. Gold demand in the first quarter of 2012 however was 207.6 tonnes, down 29% on the same period last year, with China overtaking India as the world number one.

See how the world's largest online gold investment service BullionVault allows you to Buy Gold at the lowest possible price while also letting you take advantage of secure vaulting in professional vaults...

تابع القراءة

Weak Euro "Keeping a Lid" on Gold Bullion Ahead of EU Summit, Germany Backs Debt Sharing, But Only for German States - 25 June 2012

Gold Bullion prices dipped below $1570 per ounce during Monday morning's London trading, though they remain broadly in line with last week's close, with markets focused on this week's European leaders summit.

Gold Bullion is now at levels similar to those seen in the second week in May, when gold fell through $1600 for the first time in 2012.

"Gold has essentially been in a sideways range for the past seven weeks," says the latest technical analysis note from bullion bank Scotia Mocatta.

"We will need to see a break through the low at $1526 to get a bigger directional move."

Silver Bullion hovered around $26.80 an ounce – a slight dip on where it ended last week – while other commodities were also broadly flat, with the exception of oil which ticked lower.

US Treasury bond prices gained meantime, along with other major governments bonds, while the Dollar also strengthened.

By contrast, European stock markets sold off this morning – with Germany's DAX down 1.8% by lunchtime –as many analysts focused on the European Union summit that takes place this Thursday and Friday in Brussels.

"The stakes are quite high [at this summit]," says Standard Chartered economist Thomas Costerg in London.

"There are very high risks building in the system, borrowing costs are rising, there are stresses in asset classes and growth is falling very rapidly."

The leaders of Germany, France, Italy and Spain, who met in Rome last Friday, announced they will put forward a growth package worth up to €130 billion at this week's summit, although no other details were provided. There was also agreement on the creation of a banking union, for which draft proposals are being drawn up ahead of this week's summit, according to newswire Reuters.

Ahead of the meeting, Italian prime minister Mario Monti proposed that money from Eurozone rescue funds be used to buy the government bonds of distressed Eurozone sovereigns directly on the open market. There was however no sign at Friday's press conference that German chancellor Angela Merkel favors such a plan.

"Monti's proposal amounts to state financing via the central bank printing press," said Bundesbank president Jens Weidmann over the weekend.

"[This] is forbidden by EU treaties...monetary policy should be restrained from limiting the financing costs of member states and from going a long way to shutting down market mechanisms," added Weidmann, who sits on the European Central Bank's Governing Council.

In May 2010, the ECB itself announced it would intervene in debt markets, and extended its Securities Markets Programme last year by buying Spanish and Italian government bonds.

"The main problem with bond buying," says Citigroup strategist Jamie Searle, "is that it gives investors an opportunity to reduce holdings, but it doesn't convince others to add."

The German government meantime has agreed to underwrite the debt of German states, which from next year will be able to issue debt for which they and the federal government are jointly liable. The decision is part of a deal with opposition parties in return for support in ratifying the fiscal treaty, on which the Bundestag is still to vote, according to newswire Bloomberg.

European leaders should create a European Fiscal Authority to buy the debt of Eurozone governments in return for fiscal reforms – financing the purchases by issuing debt for which Euro area governments are jointly and severally liable – billionaire investor George Soros argues in today's Financial Times.

 "We have to fight the causes [of the crisis]," countered German finance minister Wolfgang Schaeuble in a television interview Sunday.

"Money alone or bailouts or any other solutions, or monetary policy at the ECB...that will never resolve the problem."

Schaeuble added that US president Barack Obama "should focus on reducing the American deficit" rather than exhorting European leaders to do more.

"People are always ready to give others advice quickly. Our argument is 'we're ready'. We want more Europe."

On the currency markets, the Euro fell below $1.25 for the first time in two weeks this morning.

"The weaker Euro is keeping a lid on precious metals," says Monday's note from commodity strategists at Standard Bank.

"Physical demand out of India is being hampered by a weak Rupee, although Far East buying is still relatively robust."

Spain meantime has formally requested a bailout to fund restructuring of its banking sector, two weeks after Eurozone leaders announced they would agree a credit line for up to €100 billion.

Over in New York, the difference between bullish and bearish contracts held by noncommercial Gold Futures and Options traders on the Comex – the so-called speculative net long – rose 3.8% to the equivalent of 429 tonnes of Gold Bullion in the week ended last Tuesday.

In the same period, the volume of gold held by the world's largest Gold ETF, the SPDR Gold Trust (GLD), rose 0.6% to 1281.6 tonnes, though GLD volumes have been flat since last Tuesday.

تابع القراءة

"No Catalyst" for Gold Prices, But "Central Banks Should Keep Buying", Italy's Borrowing Costs Rise Again - 27 June 2012

Gold Prices fell as low as $1565 per ounce Wednesday morning in London – 1.4% down on this week's high – before recovering some ground by lunchtime, while stock markets posted slight gains ahead of tomorrow's European Union summit.

Silver Prices traded below $27 an ounce for most of this morning, while other industrial commodities were broadly flat on the day by lunchtime.

On the currency markets meantime, the Euro was broadly flat against the Dollar, trading just below $1.25 for most of the morning.

"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 – Europe, the US and China," reckons Daniel Brebner, head of metals research at Deutsche Bank.

"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 Gold Prices."

Brebner adds however that he expects "very steady buying by central banks" to continue, which "should help Gold Prices from weakening too much".

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 Financial Times reports, despite the policy drawing criticism from Bundesbank president Jens Weidmann after it was put forward last week.

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.

Italy sold €9 billion of six-month bills Wednesday, at an average yield of 2.96% – up from 2.10% last month.

"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.

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.

Italy is due to auction €5.5 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.

Elsewhere in Europe, German chancellor Angela Merkel told the German parliament Wednesday there is no "magic formula" that will solve the Eurozone crisis.

"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."

"I don't see total debt liability as long as I live," German chancellor Angela Merkel reportedly told her Free Democrat coalition partners Tuesday.

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.

"The deficit has started on a downward path and we expect that to intensify," said deputy budget minister Marta Fernandez Curras Tuesday.

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 £50 billion of quantitative easing earlier this month.

"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."

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.

The central banks of Kazakhstan, Russia, Turkey and Ukraine were among those who added to their Gold Bullion holdings last month, according to figures published Tuesday by the International Monetary Fund.

India's central bank meantime is considering banning the sale of gold coins by the country's banks, according to India press reports on Wednesday.

Indian trade with Dubai meantime totaled $10 billion in the first quarter of this year – making India Dubai's biggest trading partner ahead of China – data published by Dubai Customs show. Gold Bullion represented both the biggest import and biggest export for Dubai.

تابع القراءة

Euro News Is "Shot in the Arm" for Gold Prices, But Gold "Took a Breather" in First Half of 2012 - 29 June 2012

EARLIER REPORT

Gold Prices rallied as high as $1584 per ounce ahead of Friday's US trading – 2.3% up on the previous day's low – while stocks, commodities and the Euro also gained following news of an "important" agreement at the European Union summit in Brussels.

Silver Prices climbed to $27.38 by lunchtime in London – a 4.6% gain on yesterday's low.

"Resistance [for Gold Prices ] is at the top of the past week's range in the $1587-88 area," says technical analysts at bullion bank Scotia Mocatta, who add that further resistance is seen at $1625.

News of an agreement among European leaders on the use of bailout funds ""has been positive for the Euro and positive for confidence in general," adds Scotia's head of precious metals Simon Weeks.

"[This] means that equities and commodities, including gold for the time being, have all received a shot in the arm."

European leaders meeting in Brussels have asked the European Council to consider proposals for the creation of a single Eurozone banking supervisor "as a matter of urgency by the end of 2012", an summit statement issued early on Friday said.

The creation of a supervisory body could then be followed by allowing money from bailout funds to directly recapitalize banks, rather than being loaned to governments for that purpose, the statement continued.

"We affirm that it is imperative to break the vicious circle between banks and sovereigns," said the statement from the EU summit, which continued Friday.

European leaders also confirmed that assistance given by the European Financial Stability Facility to Spain's government – up to €100 billion to fund banking sector restructuring – will transfer to the permanent bailout fund the European Stability mechanism when it becomes operational next month. The loans will transfer to the ESM "without gaining seniority status" over other Spanish government bonds.

The statement also included a commitment to use "existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilize markets".

"We have taken important decisions last night," said German chancellor Angela Merkel, who prior to the summit expressed opposition to using bailout fund to buy bonds.

"We agreed that if countries need the instruments to buy bonds on the primary or secondary market from the EFSF or ESM then...conditionality would apply."

A country report would need to be presented and a memorandum of understanding drawn up, Merkel added.

"That would be the case if Spain or Italy, with regards to their interest burden, make use of such instruments."

Benchmark yields on Spanish 10-Year government bonds fell as low as 6.4% this morning, their lowest level this week. Italian 10-Year yields traded as low as 5.8%, also a weekly low.

"While not unwelcome, we do not see [the summit agreement] as a game changer," says a note from Societe Generale.

"We remain concerned that the EFSF/ESM will be seen as lacking in both efficiency and size to offer credible support to Spain and/or Italy if requested. Attention is thus likely to turn again to the European Central Bank."

European stock markets rallied this morning, with Germany's DAX up around 2.5% by lunchtime, though it remained 1.6% off last week's high. Spain's IBEX index was up 2.7%, while Italy's FTSE MIB gained 3.3%, although both indexes remained below June highs.

The Euro jumped 1.3% to $1.26 following the release of the summit statement, pushing Euro Gold Prices briefly below €40,000 per kilo Friday morning.

Based on London Fix prices, the Gold Price in Euros looked set by Friday lunchtime in London to end the second quarter of this year more or less where it began it. On a year-to-date basis, gold in Euros was heading for a 3.3% gain over the first half of the year. The Euro itself has lost around 3% against the Dollar during H1 2012.

Sterling Gold Prices by contrast looked set for a 0.8% H1 2012 loss, and a 2.8% loss over the second quarter. Gold Prices in Dollars meantime were up slightly on where they started the year, but were sitting on a 4.9% quarterly loss by lunchtime in London, having given up gains made in the first three months of the year.

A PM London Gold Fix below $1581 per ounce would see gold record its largest quarterly loss since Q2 2004 – while a fix below $1553 would mark the worst quarterly performance this century.

"After 11 years [of gains] it is only natural that gold stops and pauses for breath before taking the next step higher," says Ole Hansen, commodities strategist at Saxo Bank.

"The worry is obviously that momentum has been completely lost and leveraged players (such a hedge funds) have left the building...they will come back, but the market needs to reassert itself before that happens, as they are more followers than instigators of trends."

Over in India meantime, Rupee Gold Prices fell to a two-week low Friday, as the Rupee gained against the Dollar, newswire Reuters reports.

"There was demand yesterday evening," says Ketan Shroff, director at Pushpak Bullion in Mumbai.

"If prices are maintained at this level, we can see some buying."

Gold demand in India, traditionally the world's biggest market, was down 29% for the first quarter of 2012 compared to the same period last year. The Rupee has fallen around 25% against the Dollar over the last 12 months – while India's government has twice raised its import duties on Gold Bullion since the start of 2012.

تابع القراءة

Safe-Haven Bid to Buy Gold "Still Missing" as Latest Euro-Crisis Talks Begin, Falling Commodities "Pull Silver Lower" - 28 June 2012

Prices to Buy Gold slipped 0.5% in London wholesale trade Thursday morning, dropping back below $1570 per ounce as stock markets accelerated their losses ahead of today's Eurozone crisis summit in Brussels – the 12th such meeting in the last 12 months.

"Nein! No! Non!" said the front-page of German finance daily Handelsblatt, urging chancellor Angela Merkel not to concede to calls for weaker monetary or fiscal policy across the 17-nation currency zone.

Syria's state TV meantime reported what it called "terrorist" bomb attacks on the main court in Damascus, while neighboring Turkey deployed anti-aircraft rockets along the border.

"There's no semblance of a safe-haven [in gold] at the moment," says Société Générale's Robin Bhar, quoted by Reuters.

"But as the price goes lower that bid [to Buy Gold ] does come back as you maybe get some renewed investor interest," he adds, citing sovereign wealth funds and central banks.

Silver Prices also slipped again early Thursday, "feeling the effects of lower base metals and crude oil prices," according to one dealer, and retreating towards last week's new 2012 lows beneath $26.70 per ounce.

Brent crude – Europe's benchmark oil price – today slipped to $92.25 per barrel, only just above the marginal cost of production according to analysts at Sanford C. Bernstein & Co.

The recent drop "marks the start of the next oil price up-cycle," they believe.

Back in Silver Bullion, "I suspect some fairly chunky stops will be lurking just under these levels," says refiner and financier MKS's senior trader in Sydney, Alex Thorndike.

"If we get closer, especially considering how thin this market is currently, we could see larger players gunning for these" to drive Silver Prices still lower, he believes.

Major government bonds meantime pushed higher Thursday morning, nudging 10-year German interest rates down to 1.51% per year as the Euro currency slumped one cent to a 3-week low of $1.2410.

Italy had to pay 6.19% per year today at a sale of new 10-year bonds, up from 6.03% a month ago.

Today in Greece – where bank deposits have apparently turned positive since the election of pro-bailout Samaras party last week, and where police in Thessaloniki said they'd broken up a Euro-coin counterfeiting ring, the country's first such discovery – the new Parliament was sworn in.

New prime minister Antonis Samaras' government yesterday dismissed the senior management of the Greek national bank, risking a revival of "the practice of making political appointments" according to one banker.

Cyprus was granted formal approval for a joint European Union, IMF and European Central Bank bail-out worth €10 billion – well over half the country's annual economic output.

Slovenia "will see a Greek scenario" said its prime minister, Janez Jansa, in a radion interview unless debt-growth is stemmed by further spending cuts and tax hikes.

German unemployment today showed a rise of 7,000 for June, only its third rise of the last 3 years but suggesting that "the resilience of the German labour market is slowly cracking up," according to analysts at ING bank.

Eurozone consumer confidence worsened in June, falling to its worse level since mid-2009 on the European Commission's latest survey. Industrial sentiment worsened to 2.5-year lows.

A raft of UK economic data for the first quarter was revised lower, with GDP now seen contracting by 0.3% from the end of 2011.

"The elevated cost of wholesale funding for banks has continued to be passed through" to mortgage and business borrowers, the Bank of England said today in its latest Credit Conditions report.

Looking ahead, UK lenders see credit getting tighter for corporate borrowers than for households, especially in commercial real estate.

"Markets await news on the EU summit," says Thursday's note from Standard Bank in London, but "not much progress is expected on the key issues...[such as] a move towards a common bond markets, as Germany remains vehemently in opposition.

"Consequently, we feel that the Euro will stay on the backfoot, lending a downward bias to precious metal prices."

Investment bank Morgan Stanley today cut its precious metal forecasts for 2012-2014, mapping the cut onto its outlook for global commodity prices, but remaining long-term bullish.

Morgan Stanley's analysts now see the price to Buy Gold averaging $1677 per ounce this year, down from the previous forecast of $1825.

تابع القراءة

Investment Demand "Essential" for Gold Bullion to Gain, But Gold "Could Benefit" from Policy Response - 2 July 2012

Gold Bullion rose as high as $1597 per ounce during Monday morning's London trading – in line with where it ended last week – while European stock markets ticked higher following the release of better-than-expected European manufacturing data.

"Gold still remains in the same range since early May," say technical analysts at bullion bank Scotia Mocatta, adding that gold "would have to move above trendline resistance [at $1624] to reverse the bearish posture."

Silver Bullion this morning hit $27.58 per ounce – also in line with last week's close – as other industrial commodities fell, with WTI crude oil down below $84 a barrel.

US Treasury bonds edged higher, while UK and German government bond prices fell.

Eurozone manufacturing activity continued to contract last month, with the Eurozone PMI staying unchanged at 45.1 – slightly above consensus forecasts.

Germany's manufacturing PMI dropped from 45.2 to 45.0 – though this too beat expectations.

Eurozone joblessness meantime ticked higher in May, with the unemployment rate rising to 11.1%, up from 11.0% in April, figures published Monday show.

The European Central Bank is expected to cut its main policy rate below 1% when it meets on Thursday, according to a poll of economists by newswire Reuters.

ECB president Mario Draghi said Friday he is "actually quite pleased" with the outcome of last week's European Union summit, at which it was agreed rescue funds could be used to directly recapitalize banks - but only after the creation of a single banking supervisory body.

"The ball is [now] very much in the ECB's camp," says Gilles Moec, London-based European economist at Deutsche Bank.

"We are staunch believers that gold will remain a risk-on asset for the foreseeable future," says Nikos Kavalis, metals analyst at RBS.

"If we continue to see a more definitive policy response by authorities, gold will continue to benefit...[but] the investment bid will be essential for the price to move up."

In Vienna, Austria is today expected to become the latest Eurozone country to ratify the creation of the European Stability Mechanism, the permanent bailout fund that was supposed to become operational yesterday and is now scheduled to launch next Monday, when lawmakers vote on the issue today.

The German Bundestag voted in favor of ratification on Friday, although the ESM still needs to be approved by the German Constitutional Court.

Here in the UK, June's manufacturing PMI came in better-than-expected Monday at 48.6, up from 45.9 in May, though the figure suggests continued contraction in the sector.

Britain is "in the middle of a deep crisis," Bank of England governor Mervyn King said last week.

"I don't think we are yet half-way through."

The Bank's Monetary Policy Committee announces its latest monetary policy decisions this Thursday, including whether it will launch another round of quantitative easing to add to the £325 billion in asset purchases already undertaken.

"Our working assumption is that the committee will raise the QE limit by £50 billion," says Peter Dixon, global equities economist at Commerzbank.

"But given the fragility of the economy and financial markets we cannot rule out an even bigger increase."

Elsewhere in London, some traders at Barclays may have believed the practice of underreporting borrowing costs had tacit approval from the Bank of England, according to newspaper reports.

Barclays was fined £290 million last week after it admitted some of its staff gave inaccurate information about the borrowing costs to the committee that sets Libor – the London interbank offered rate widely used as a benchmark.

Former Barclays chairman Marcus Agius, who resigned Monday, and chief executive Bob Diamond are due to appear before the Treasury Select Committee this week.

Reports suggest that a conversation between Diamond and the Bank's deputy governor, financial stability Paul Tucker may have led to the impression among some staff that the Bank, concerned that Barclays' Libor submissions were higher than its peers, was content for Barclays to underreport. The Bank of England denies it was aware of attempts to manipulate Libor.

China's manufacturing sector grew at its slowest pace for seven months in June, according to official purchasing managers index data published Sunday. China's National Bureau of Statistics reported last month's PMI as 50.2 – down from 50.4 a month earlier. A figure above 50 indicates the sector expanded, while below 50 suggests contraction.

"New export orders placed at goods producers dropped at the steepest rate in over three year," says HSBC in the report accompanying its own PMI figure. HSBC's privately-produced PMI was 48.2 for June, up from 48.1 the previous month.

"It is all about growth and employment," says HSBC economist Qu Hongbin.

"Growth is likely to be on track for further slowdown...we expect more decisive easing efforts to come through in coming months."

"We expect the government to loosen policy further to ensure economic growth rebounds in the third quarter," agrees Nomura economist Zhang Zhiwei, who predicts the People's Bank of China will cut banks' reserve requirement ratio – the amount they have to hold in reserve as a proportion of assets – by 0.5 percentage points this month.

China was the world's biggest source of Gold Bullion demand in the six months to the end of March, overtaking previous world number one India.

Over in New York, the so-called speculative net long position of Gold Futures and options traders on the Comex – calculated as the difference between bullish and bearish contracts held by noncommercial traders – fell 16% in the week to last Tuesday to the equivalent of 360 tonnes of Gold Bullion, figures from the Commodity Futures Trading Commission show.

"We regard the current skepticism displayed by speculators to be constructive [for gold]," says a note from Commerzbank this morning, adding that most traders' fears should now be "priced in".

تابع القراءة

ECB Ponders "Uncharted Territory", Monetary Policy "Will Push Up Gold Prices" - 4 July 2012

Gold Prices held steady around $1615 per ounce Wednesday morning in London – 1.1% up on the week so far – while European stock markets edged lower and the Dollar gained, amid speculation that the European Central Bank will cut interest rates tomorrow.

A day earlier, Gold Prices rallied as high as $1624 per ounce during Tuesday's US trading, the last trading day before today's Independence Day holiday.

"Short covering and bargain hunting helped support the rally," says a note from Commerzbank, referring to the practice of traders who have bet on gold going lower closing their position by Buying Gold futures or options.

Spot Silver Prices meantime climbed as high as $28.41 per ounce this morning – 3.2% up on last week's close – as other industrial commodities edged lower.

On the currency markets, the Euro fell below $1.26.

"The main focus of the week is Thursday's ECB meeting, where a rate by of 25 basis points [one quarter of a percentage point] by the ECB is expected," says a note from Swiss bullion refiner MKS.

The ECB's main policy rate currently stands at a record low of 1% – though it remains higher than those of the Bank of England and the Federal Reserve.

"The economic case for a 50 basis-point rate cut is pretty watertight," says Ken Wattret, chief Euro-area economist at BNP Paribas.

"But for now it's easier to just cut by 25 basis points...that is enough to show you are standing ready to do something," he adds, noting that a cut in rates would benefit banks that borrowed over €1 trillion at the ECB's three-year longer term refinancing operations (LTROs) in February and December.

Cutting interest rates would be "a bold move and will lead the ECB into uncharted territory" says Julian Callow, chief European economist at Barclays Capital in London.

"With soaring unemployment and few signs of the economy recovering, some strong monetary medicine is needed. But let's be honest, a rate cut by itself will not end the recession, we need much more for that."

The services sector of the Eurozone economy continued to contract last month, although at a slowly rate than in May, according to purchasing managers index data published Wednesday. The June Eurozone Services PMI was 47.1 – up from 46.7 in May (a figure below 50 indicates sector contraction).

Germany's Services PMI meantime fell by more than expected, from 51.8 in May to 49.9 last month.

Here in London, the Bank of England is also due to announce its latest policy decision on Thursday, when it is widely expected to announce at least a further £50 billion in quantitative easing asset purchases.

"As everybody now expects QE the announcement effect has already happened so there will be very little negative impact [on Sterling], if any at all," reckons Adam Cole global head of FX strategy at investment bank RBC Capital Markets.

Last month's UK Services PMI showed a bigger sector slowdown than most analysts were expecting, coming in at 51.3 – down from 53.3 in May.

The front pages of British newspapers are dominated today by the appearance before the Treasury Committee of former Barclays chief executive Bob Diamond (available to watch live at 2pm UK time), after written evidence from Barclays included reference to a conversation between Diamond and the Bank of England's Paul Tucker.

Tucker, the Bank's deputy governor for financial stability and a possible replacement for Mervyn King as governor, was one of two Bank staff members cited by the Telegraph this week as having benefited from pension pot gains in excess of £1 million over the last year, "due mainly to a fall in gilt yields".

The US economy meantime will grow at 2% this year, according to revised International Monetary Fund forecasts. The IMF also cut its 2013 growth forecast yesterday, from 2.4% to 2.25%, citing the risks posed by the so-called "fiscal cliff" – the combination of spending cuts and tax rises due to come in next January unless lawmakers agree alternative policies.

"It is critical to remove the uncertainty created by the 'fiscal cliff'," the IMF's report says, "as well as promptly raise the debt ceiling, pursuing a pace of deficit reduction that does not sap the economic recovery."

"No country can go on with heavy and growing debt," added IMF managing director Christine Lagarde.

"In order to bring the debt under control, action needs to be taken over a period of time...it needs to be gradual, not so contractionary that the economy stalls."

"Americas debt/GDP [ratio] at close to 100% is not near-term threatening," says Bill Gross, founder of world's largest bond fund Pimco, in his monthly Investment Outlook.

"But if continued upward on trend could be absolutely debilitating....an authentic debt crisis – which the world is now experiencing – can only be ultimately cured in two ways: 1) default on it, or 2) print more money in order to inflate it away. Both 1 and 2 are poison for bond and stock holders."

Back in Europe, Deutsche Bank has cuts its gold forecast for 2012 to an average Gold Price of $1726 per ounce – down from the previous forecast of $1800 – with analysts citing the "holding pattern" they say has been adopted by central banks. Next year, however, Deutsche Bank forecasts gold will average $2050 per ounce – more than 25% higher than its current level.

"While we question the effectiveness of [monetary policy] in sustainably supporting growth in the western world," a note from Deutsche says, "we do believe that it will have the effect of pushing up Gold Prices as the metal responds to the implied erosion in value of money in Dollar terms."

تابع القراءة

Gold Prices "Could Be Helped by Fed QE3", Central Banks "Have Not Printed Too Much Money" - 3 July 2012

Gold Prices hovered just below $1610 per ounce during Tuesday morning's London session, after breaking through the $1600 mark in earlier Asian trading.

Silver Prices touched $28 an ounce for the first time in nearly two weeks, while stocks and commodities also gained after disappointing US manufacturing data led to renewed speculation that the Federal Reserve might launch a third round of quantitative easing, known as QE3.

US manufacturing activity fell last month, according to the June ISM purchasing managers index published Monday. The ISM PMI was 49.7 – down from 53.5 in May and below analysts' consensus forecast, which was around 52. A PMI score of less than 50 indicates contraction.

"The dimmed economic outlook leads to expectations of more stimulus, which will weaken the Dollar and help metals," says one trader in Shanghai, adding that "silver will be relatively weaker than gold due to its industrial nature."

"Over the last few weeks US numbers have worsened a lot," says Eugen Weinberg, head of commodity research at Commerzbank.

"This has brought about the probability of QE3 – which is probably the most important reason for the market to believe in gold."

The Federal Reserve last month chose not to launch an additional round of QE, instead extending its bond maturity extension program Operation Twist, which aims to lower longer term interest rates by selling shorter=dated securities and buying longer-dated ones.

"We are unlikely to see a big add-on after Operation Twist was extended," reckons Dominic Schnider at UBS Wealth Management.

"Unless things fell off the cliff. And remember, when things did fall off the cliff in 2008, gold fell as well."

Sales of gold coins by the US Mint were down 40% in the first half of the year, compared to the same period last year, although June sales beat May's for the first time in three years.

Over in Europe, goods prices received by producers fell 0.5% in May, according to official Eurozone producer price index data published Tuesday.

"Businessmen don't like prices going down," says Lord Robert Skidelsky, professor of political economy at Warwick University, speaking on BBC Radio 4 Monday on a program looking at whether a gold standard would make the financial system more stable.

"It means they produce at one price and then may have to sell at a lower price...they prefer prices to be going up [because] they reckon their profits as a markup of their costs."

Skidelsky adds that "although [western economies have] been printing money, it hasn't been too much money".

The time to worry, says Skidelsky, is when prices "accelerate and the value of money collapses completely...then of course you go back to gold".

Here in London, Bob Diamond has resigned as Barclays chief executive. Diamond has been under pressure since Barclays was fined a record £290 million last week, after the bank admitted some of its staff had sought to manipulate Libor, the London interbank offered rate used as a worldwide benchmark.

Marcus Agius, who resigned as Barclays chairman on Sunday, will now return to lead the hunt for Diamond's successor.

Over in Asia, traders report that the rise in Gold Prices since the weekend has led to a fall in demand for physical bullion.

"Customers went in to pick up gold below $1560 last week, but now the market is quiet again," one dealer in Singapore told newswire Reuters Tuesday.

تابع القراءة

Investors Urged to Buy Gold "Ahead of QE3" as Eurozone and China Cut Interest Rates, UK Prints £50Bn - 5 July 2012

US Dollar prices to Buy Gold fell from a new 2-week high of $1624 per ounce Thursday lunchtime as New York returned from the Fourth of July holiday, easing 0.5% lower as the Euro currency fell hard following a weakening of central-bank policy in Frankfurt, London and Beijing.

The European Central Bank today cut its key lending rate by 0.25% to a new record low of 0.75% as widely expected.

It also cut the interest rate paid to commercial banks holding cash on deposit at the ECB to zero.

European stock markets rose and commodity prices jumped on the news, pushing Brent crude oil back above $100 per barrel.

Silver Prices retreated 1.2% after hitting this week's high at $28.45 per ounce.

"Hold tight to gold ahead of QE3 [in the US]," says today's Global Daily Spotlight for clients of investment and bullion bank Société Générale, advising a "Strong Overweight" position in precious metals.

"Our fundamental gold view is unchanged, and we still see upside for the metal," agrees the latest Commodities Daily from Standard Bank in London.

"We would see any potential sell-off in gold after [today's European rate] announcement as a short-term opportunity" to Buy Gold, the bank's analysts say.

Because "ultimately a rate cut implies a lower real interest rate. That would be bullish for gold."

The People's Bank of China today made a surprise cut to its deposit and lending rates, taking them down to 6% and 3% respectively, but defying analyst expectations for a cut to commercial lenders' required reserves ratios.

Consumer price inflation in China – now the world's #1 gold consumer – slowed to a 2-year low of 3.0% in May on the official measure.

UK investors and savers wanting to Buy Gold meantime saw the wholesale price rise through £1040 per ounce for the first time since mid-June after the Bank of England held its key lending at a record-low of 0.50% for the 40th month running but extending its Quantitative Easing by another £50 billion.

The Bank has already bought £325 billion of UK gilts under its QE program – equal to £1 in every £4 of government debt in issue.

"Without additional monetary stimulus, it [would be] more likely than not that inflation would undershoot the target [of 2.0% per year] in the medium term," said the Bank of England's statement today, citing "the increased drag from the heightened tensions within the Euro area."

Spain this morning sold €3.0 billion in new bonds, paying 6.43% per annum to raise 10-year debt – sharply higher from the last auction's 6.04%.

German factory orders fell 5.4% in May from the same month last year, new figures showed on Thursday.

"Above all, [there must be] no pure Keynesian stimulus in the Eurozone!" says Patrick Artus at French investment and bullion bank Natixis.

"Stimulating demand in the Eurozone's troubled countries will first and foremost lead to an increase in their imports and their external deficits. [Any] stimulus programme should focus on investments generating long-term growth and exportable production capacity."

Eurozone investors and savers wanting to Buy Gold today saw the price rise 0.9% to a 1-month high of €41,750 per kilo – just shy of the €1300 per ounce level first breached in the "perfect storm" of summer 2011.

Meantime in India – formerly the world's #1 source of demand to Buy Gold, but now overtaken by China – "The weak monsoon will most likely hamper gold demand in rural India," says Bombay Bullion Association president Prithviraj Kothari, speaking today to the Economic Times.

Demand to Buy Gold from rural areas accounts for some 60% to annual consumption, says the paper.

"Also, investors are putting their money in fixed deposits that give them more than 9% returns," says Kothari.

"Today demand is negligible," says a Mumbai Gold Dealer quoted by Reuters, blaming a drop in the Rupee's foreign exchange rate which pushed prices higher.

Households "are waiting for a correction" before they Buy Gold he says, citing 29,000 Rupees per 10 grams – some 3% below Thursday's prices – as a key level for "a pickup in demand."

Vietnam effectively nationalized its domestic gold bar industry meantime, with the central bank now the sole producer of investment bars.

The State Bank of Vietnam also named Saigon Jewelry Co. – which it "administratively acquired" in 2011 – as the official brand for Gold Bars.

"The move was intended to save expenses for the government and society, as well as avoid messing up the gold market," says SBV deputy governor Le Minh Gung.

تابع القراءة