Gold breaks USD 1700 price again

The gold price climbed $12.08, or 0.7%, to $1,723.63 per ounce Thursday morning as the yellow metal built on yesterday’s Fed-induced rally. Silver added to its gains alongside the gold price, by $0.27, or 0.8%, to $33.61 per ounce. Equity markets throughout Asia and Europe were largely higher, while U.S. markets looked to open in the black as well.

Yesterday, the Federal Reserve lit a fire under the price of gold, as the yellow metal jumped $44.72, or 2.7%, to $1,711.55 per ounce. The surge in the gold price was accompanied by U.S. dollar weakness and a broad-based rally on Wall Street. With its advance, the gold price extended its year-to-date gain to 9.5% and reached its highest level since December 9, 2011.

While the gold price also posted its best day since October 25, 2011, silver fared even better. Gold’s sister precious metal climbed $1.28, or 4.0%, to $33.34 per ounce. Other precious metals headed north as well, with platinum and palladium futures each rising 2.0% to $1,583.20 and $694.00 per ounce, respectively. Among cyclical commodities, copper futures increased by a more modest 0.9% to $3.84 per pound, while crude oil added 0.5% to $99.40 per barrel.

The gold price rally propelled gold shares substantially higher on Wednesday, as the group was the best performing sector in the equity markets. The Market Vectors Gold Miners ETF (GDX) rebounded from an intra-day low of $51.58 per share to finish higher by 6.7% at $55.23. The gain far outweighed that of the broader markets, as the S&P 500 Index rose 0.9% to 1,326.06. Among large-cap gold producers, two of the top performers were Agnico-Eagle Mines (AEM) and Yamana Gold (AUY). AEM soared by 9.0% to $37.58 per share and AUY by 9.8% to $16.92 per share.

The primary catalyst for yesterday’s gold price strength was the particularly dovish tone emanating from the Federal Open Market Committee (FOMC) meeting. There, the Federal Reserve chose to extend the timeframe for its zero-interest rate policy to late-2014 from mid-2013. Additionally, it introduced new language in the FOMC statement by saying that it intends to maintain a “highly accommodative” monetary policy stance for the foreseeable future.

Along with the statement, for the first time the Ben Bernanke-led Federal Reserve released a summary of economic projections from its individual members. In particular, the Fed provided a chart showing the time at which the central bankers feel it will be appropriate to conclude its accommodative monetary policy stance. Eleven of 17 members identified this time as 2014 or later, with four choosing 2015 and two choosing 2016.

Commenting on the Fed’s actions, Credit Suisse strategist Carl Lantz characterized the central bank as even more dovish than meets the eye. In a note to clients, Lantz wrote that “The fact that the FOMC was willing to provide late 2014 as the earliest likely date for the first rate hike suggests that the actual expectation is significantly beyond late 2014…We suggest that by announcing that the first hike is unlikely to occur until ‘at least’ late 2014, the FOMC is actually providing the bottom of a confidence band around the committee’s intended estimate for the first hike…it would appear that the ‘core’ of the committee and a strong plurality of voters are in the 2015 or 2016 camps.”

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Gold Prices Held Back by Europe, Strong Dollar

NEW YORK (TheStreet ) — Gold prices failed to stand their ground Monday as hopes that Europe can contain and solve its sovereign debt crisis faded.

Gold for December delivery closed down %6.40 at $1,676.60 an ounce at the Comex division of the New York Mercantile Exchange and prices were continuing lower in after-hours trading. The gold price has traded as high as $1,696.80 and as low as $1,677 an ounce while the spot gold price was shedding $9, according to Kitco’s gold index.

Silver prices lost 35 cents at $31.82 an ounce while the U.S. dollar index was up 0.72% at $77.16.

Hope is the key for gold and hope faded away on Monday. Eurozone leaders have one week to come up with a viable plan to contain the sovereign debt crisis — saving Greece, recapitalizing banks, and determining the fate of sovereign bondholders.

The original plan for Greece was another 109 billion euro bailout, which had been agreed upon at a July meeting. But that figure is now too small to save the country, leaving Eurozone leaders trying to figure out how big of a loss they can force bondholders to take.

As a result, officials must consider how to recapitalize European banks to protect them against such losses as well as how to expand the European Financial Stability Fund, or EFSF, to provide financial support for sovereign nations, bondholders and banks.

Although European leaders are committed to coming up with a plan, which was supported by the G-20 over the weekend, they still have to find one and the devil will be in the details. A spokesperson for German leader Angela Merkel on Monday warned that progress would be slow and a definitive solution might not show itself this weekend at the European Union meeting Sunday.

The disappointment led investors to dump stocks and gold as the two have been moving side by side of late. Disappointment drags on the euro, boosts the dollar and hurts gold prices or vice versa. If investors feel less confident about stocks then they might have more need to liquidate good performing assets like gold. When investors feel better about their risk tolerance then they have less need to sell gold.

This tug-of-war will likely dominate trading in the week ahead. “Open interest shows traders are in and out at the drop of a hat or remark from Europe,” says George Gero, senior vice president at RBC Capital Markets.

Net long positions only increased by 3,737 contracts in the week ending October 11th, according to the latest Commitment of Traders report. Speculative short positions decreased by 2,856 contracts, which means part of last week’s rally can be attributed to short covering, traders unwinding positions where they were betting against the gold price.

Kitco’s Gold Index, however, points to stronger physical demand with the gold price actually up $2.75, but with those gains tempered by a stronger U.S. dollar. India’s famous Diwali season starts next week. The festival of lights marks a tradition of gift exchanges and shopping particularly for gold jewelry. Buying goods, especially during the first five days of the festival, is considered good luck and many experts are looking for a ramp up in physical gold purchases.

“For the moment gold continues to build a base above the $1650 mark with physical demand, particularly from India,” says James Moore, research analyst at FastMarkets.com. “Inflation remains stubbornly high in India, over 9% for the 10th month in a row,” says Mark O’Byrne, executive director at GoldCore, a bullion dealer, “and this is leading to continuing store of wealth demand from Indian buyers.”

Gold mining stocks were sinking Monday. Kinross Gold(KGC) was losing 2.26% to $14.30 while Yamana Gold(AUY) dropped 1.84% to $14.92. Other gold stocks, Agnico-Eagle(AEM) and Randgold Resources(GOLD) were trading lower at $57.19 and 100.55, respectively.

–Written by Alix Steel in New York.

To contact the writer of this article, click here: Alix Steel.

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Article source: http://www.thestreet.com/story/11278937/1/gold-prices-held-back-by-europe-strong-dollar.html

Sky-high gold price doesn’t dim festive rush

NEW DELHI: Buying gold for the festive season is a tradition in most families, and despite its sky-high prices, this year is no different. And the crowd on Saturday at the Festival of Gold, organized by MMTC, which is the largest bullion importer for India, was enough to validate that gold still reigns supreme.

The price of gold went up by Rs 45 to Rs 27,165 per 10g on Saturday, and experts say this steady rise is the reason behind sustained, if not increased, demand. “People have money to invest but there is a lack of avenues. Gold provides a hedge against inflation, and the steady rise in gold prices makes buyers perceive it to be a safer investment. Besides, it is a tangible investment, and many buyers like the feel of gold in their hands,” said N Balaji, general manager, precious metals, MMTC.

From delicate chains to gold biscuits to heavy sets, there was something for everybody, but most chose to invest in jewellery since the wedding season is coming up. “I am here to buy jewellery because apart from it being a sound investment, I don’t have to stow it away. I can actually utilize it,” said Dr Nirupama, a radiologist. And she is not alone. Balaji said about 75% of the total demand for gold is by way of jewellery.

Gold might sit pretty at the top, but when it comes to silver people are still wary. The silver price has been fluctuating, and the volatile situation has scared many buyers from investing in silver. “There was a time when people expected the price of silver to reach Rs 1 lakh per kg, but as soon as it touched Rs 70,000, it plummeted. People don’t want to buy when the situation is volatile,” said Balaji. While gold appreciated on Saturday, the price of silver dipped further by Rs 250 to settle at Rs 53,550 per kg.

Rameshwar Lal Gupta, who has been running his family business of silver articles for 15 years, said demand for silver was at an all-time low, “Demand is 50% less now. People who need it for weddings or small gifts are the only ones buying.”

Article source: http://timesofindia.indiatimes.com/city/delhi/Sky-high-gold-price-doesnt-dim-festive-rush/articleshow/10371309.cms

Gold Price Targets $1700

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The broader equity markets were mixed as well yesterday, with the Dow Jones Industrial Average (DJIA) dipping 0.2% to 11,416.30 and the SP 500 rising 0.1% to 1,195.54. In currencies, the euro initially slid to 1.356 versus the U.S. dollar as the European sovereign debt crisis continued to weigh on the minds of investors. Despite yesterday’s decline, rising confidence in the ability of European leaders to prevent a system-wide shock stemming from the eventual default of Greece has helped boost the single European currency in recent days. The euro gained over 1% to 1.378 against the U.S. dollar this morning.

Dr. Martin Murelbeeld, chief economist at Dundee Wealth Economics, discussed the euro zone debt crisis in a report published on Tuesday. He argued that the European Central Bank (ECB) needs to significantly expand the size of its bailout programs to adequately shore up the banking system. A “bazooka” in the range of a €2 trillion – as opposed to the €440 billion European Financial Stability Fund (EFSF) – is necessary, according to Murenbeeld.

“Of course, Greece will default,” Murenbeeld added. “But that is exactly why central bank money is required. Such a default will have massive repercussions through the Euro-banking sector. To stop an ensuing bank run the lender of last resort – the ECB – will have to lend governments money with which to top up their banks, regardless of how solid such paper really is.”

As for the gold price, he predicted that it “will likely trend sideways, within a fairly wide band, until such time as the ECB/EFSF readies the aforementioned bazooka, which it will inevitably have to do when a major bank default occurs.” Murenbeeld – a long-time gold bull – also noted that “We are fundamentally bullish on gold, regardless of recent trends.”

“If 2008 is a guide then there is a chance” that the gold price’s 200-day moving average “could be tested in due course,” Murenbeeld contended. “Pressure continues to build for a European policy response however, so we cannot rule out a sudden updraft in the gold price on the back of new monetary policy initiatives in Europe. Leaders seem to agree that something needs to be done but, as of yet, the ‘bazooka’ is nowhere to be seen.”

David Rosenberg – another long-time gold price bull – offered similar advice for Europe in a note to clients on Tuesday. “No doubt it is good to see EU policymakers shift from denial to acceptance but the reality is that the extent of the bank recapitalization needs to far exceed any government’s capacity to remedy the situation in its entirety.”

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Article source: http://www.ibtimes.com/articles/230559/20111013/gold-price-targets-1-700.htm

Gold Prices Flatline on Stronger Dollar

NEW YORK (TheStreet ) — Gold prices were drifting sideways Tuesday as a stronger U.S. dollar and profit taking weighed on the metal.

Gold for December delivery was losing $1.90 at $1,668.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,686.70 and as low as $1,655.40an ounce, while the spot gold price was down $9, according to Kitco’s gold index.

Silver prices were up 4 cents at $32.02 an ounce while the U.S. dollar index was adding 0.21% at $77.78.

Gold prices rallied 2% on Monday and some investors were using the pop to take profits while a stronger U.S. dollar capped any gains and kept bargain hunters sidelined.

Experts seem split as to where gold goes from here. Mihir Dange, founder of Arbitrage, says he is short term bearish but long term bullish and is forecasting a wide range for gold prices from $1,550 to $1,715 an ounce. If either of those levels are broken, the upside and downside could be $100, according to Dange.

Gold prices continue to move with stocks, a bizarre correlation of late. “Both markets have been beaten up so much,” argues Dange, “I think once we get out of this range and you find the SP out of this range [the correlation] will return to normal ”

It is also possible that gold and stocks are moving together on the same news but for different reasons. The latest headline is that the Eurozone will come up with a plan to recapitalize European banks whether through private funds, governments or the European Financial Stability Fund, or EFSF. Hopes of a plan rallied stocks, but those same hopes have many experts now seeing inflation — that part of the plan will consist of the European Central Bank pumping more money into governments and banks.

“We are seeing gold rally on the news that there will be more printing money that we’re not going to go into the deflationary spiral that we saw in 2008,” says Jeb Handwerger, editor of GoldStockTrades.com. “There’s definitely some upside momentum to take us to challenge some previous levels around $1,750 … traders have to remember that short positions are increasing to record levels similar to 2008. Whenever the masses get to such a level like that you have to be thinking about a turn around and a relief rally.”

Phil Streible, senior market strategist at MFGlobal, also says that the ECB will “expand their balance sheet no matter what.” There is a built in back-stop, argues Streible, who says even in the U.S. the Federal Reserve could do so many things, among them pumping more money into the system, to help jumpstart the economy.

Streible argues that this doesn’t mean another blow-off top for gold. “If [the European Central Bank] expands, it does weaken the euro and help the dollar and limit gold’s rally … gold will still go up but not that $2,000 number everyone is looking for.” Streible thinks that $1,850 an ounce is more achievable for year end. “If you see equities breakout …. and gold is not north of $1,700, I think investors move out of gold and get more heavily weighted in equities.”

Gold mining stocks were moving slightly lower Tuesday. Barrick Gold(ABX) was shedding 0.15% to $47.88 while Newmont Mining(NEM) was losing 0.25% at $65.11. Other gold stocks, AngolGold Ashanti(AU) and Goldcorp(GG) were trading lower at $40.62 and $47.37, respectively.

–Written by Alix Steel in New York.

To contact the writer of this article, click here: Alix Steel.

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Article source: http://www.thestreet.com/story/11273844/1/gold-prices-flatline-on-stronger-dollar.html

Silver Suspected Bear Pennant Signaling Further Price Drop

Commodities / Gold and Silver 2011
Oct 09, 2011 – 09:34 AM

By: Clive_Maund

It now looks like we were a little too bullish in the last update, for the way silver has acted over the past week suggests that another sharp drop is imminent before the dust finally settles on this reactive phase, that it likely to take it to or some way below its recent panic lows.

On silver’s 4-month chart it is now apparent that a bear Pennant has been forming since the panic bottom, with the weak upside volume portending an imminent breakdown and steep drop. A reader pointed out to me during last week that silver’s panic lows occurred in thin trading on the Hong Kong market, and for this reason we do not have to factor in the tail of the “Dragonfly Doji” candlestick shown on the chart when deciding where to draw the boundaries of the Pennant. The measuring implications of this Pennant call for a drop at least to the vicinity of the intraday lows of the Dragonfly Doji and possibly somewhat lower towards the $24 area – at this point the decline should have completely run its course and we will be looking to buy aggressively. We can see that a bearish “Harami” pattern has formed in silver over the past 2 trading days, implying that breakdown from the Pennant and the expected steep drop that will follow is imminent. A reason why this next drop should end the decline is that silver is already deeply oversold as shown by its MACD indicator, and it will of course be even more so after this impending decline. Those interested in going long silver investments in the near future should “keep their powder dry” but stand ready to wade in big time if silver drops into the bright green “aggressive accumulation zone” shown on our chart.

On silver’s year-to-date chart we can see that it has suffered 2 massive takedowns this year, that have brought its price back almost to where it was at the start of the year. So why is this?

You may recall that there was much talk earlier this year amongst silver bugs about J P Morgan’s massive silver short position, and their cheerleaders encouraged them to believe the fantasy that they could bring down J P Morgan by buying physical silver, as expressed by the picture below which was doing the rounds at the time…

The idea that a mottley bunch of small highly leveraged speculators can bring down an entity like J P Morgan is of course laughably naive, and what in fact has happened is that the big players have turned the tables on the small speculators, by using their leverage and margin against them. They organised the 2 massive silver takedowns, one in early May and other just finished, aided by friends in high places hiking margin requirements, to run them out of their positions, by triggering their stops and margins calls, and then covered their shorts at the resulting low prices. Thus, the latest COT charts reveal that Big Money has largely cleared out of its short positions in silver, which is mega-bullish, with the dramatic drop on the last rout being a sign that we haven’t got much further to go before silver reverses, possibly dramatically to the upside, and this is a train that will leave the station without all the get rich quick merchants that were strutting about proudly earlier this year, who will be left behind lying face down in the dirt.

The COT chart above shows an astonishing drop in the Commercials short positions in silver over the past several weeks which is viewed as hugely bullish for the medium and long-term, notwithstanding the expected sharp drop over the short-term. While with this chart some concern could arise over the distortion created by hiked margin requirements, such is not the case with the following chart which has been supplied by Richard Guthrie of The Scarborough Bullion Desk in England, for this is a ratio chart showing the ratio of the Commercials’ short to long positions, and as such is immune from such distortion, and as we can see this ratio is NOW AT A RECORD LOW, which is interpreted as hugely bullish, and here we should note that this chart is only up to date as of 20th September and does not include the latter part of the plunge, and so the ratio can be presumed to be at an even lower reading now. The message of this chart is clear – we are now late into the endgame of the transfer of silver assets from weak to strong hands, and that, therefore, the final plunge that is expected shortly should be seized upon as a rare opportunity to go long all things silver – silver itself, silver ETFs, silver stocks, and options for leverage in all of these by those who are qualified by experience to handle the risks involved, at low prices that we are unlikely to see again for a long, long time.

By Clive Maund
CliveMaund.com

For billing subscription questions: [email protected]

© 2011 Clive Maund – The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

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