Actions Coming Back to Gold Prices
The U.S. Comex gold futures surged 1.51 percent last Friday, fell back
0.22 percent on Monday and jumped 0.9 percent on Tuesday, ending at
$1,586.70. The gauge reached $1,590.1 on 9 April. The gold futures
have fallen in the past two consecutive weeks by 1.88 percent. The
S&P 500 Index and the Euro Stoxx 50 Index rebounded by about 1
percent and 0.40 percent respectively this week after the sell-off last
week. As of Tuesday New York close, the Dollar Index has fallen 0.23
percent after falling 0.58 percent in the previous week. The biggest
story in the currency market has been the Yen, which dropped 3.43
percent last week and 1.46 percent this week against the U.S. Dollar.
Digesting the Bank of Japan Action and Other Economic Data
Although the Bank of Japan recently announced an aggressive monetary
policy including an increase of the JGB purchases from 4 trillion to
over 7 trillion Yen per month, a rise in the maturities of the bond
purchases and a determination to ease until inflation reaches 2 percent
per year. Gold prices failed to increase upon the BOJ news at first.
However, when the U.S. March non-farm payrolls came in at 88,000 instead
of 190,000 last Friday, the Japanese Yen fell close to 100, and the
March Chinese inflation data was lower than expected at 2.1 percent,
gold price started to react. Also, the U.S. Fed Ben Bernanke mentioned
in his recent speech that he saw a room for improvement in the U.S.
economy. Gold price jumped in expectation of more stimulus measures by
the Central Banks and the much bigger amount of Japanese liquidity.
Gold priced in Yen reached a 33-year on 8 April and rose about 8 percent
this year.
Gold Investors' Positioning
Barclays recently reiterate that the biggest short-term risk for gold
pries will be gold-backed ETP outflows. Close to 18 tonnes of outflow
occurred in the first week of April, after a record net outflow of 50
tonnes in February. Barclays also reported that fund managers raised
their gross shorts by 14,500 lots, but raised their gross long by only
2,200 lots. Total gross long positions remain around 200,000 lots since
last August before the QE3 announcement.
What We Are Watching
Gold investors will scrutinize the U.S. March FOMC meeting minutes to be
released on 10 April. On 12 April, we will also look for any
announcements from the Eurogroup meeting and the EU17 February
industrial production data. The Indian restocking to take advantage of
the weaker gold prices in Rupee ahead of the Akshaya Tritiya festival is
also worth monitoring.
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10 Apr 2013 | Categories: Gold
