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Bullion Thoughts - David Govett

Good morning,

Not a good day for commodities across the board, especially those linked to industrial usage. Precious metals and base metals both fell heavily, with silver and the PGM's leading the way for the former. Gold initially held up in the face of the sell off, but succumbed to the pressure mid way through the afternoon. Figures from China, Australia and the US, all suggested that the global economy is slowing down once again and this led to the slump in prices. The FOMC meeting brought no real surprises, with the following statement summing up the continuance of QE. " The committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes".

This really tells us all we need to know and had very little impact on the market. We now await the ECB rate decision later today, along with Initial Jobless Claims. After that we shall wait for NFPs tomorrow. A lot of waiting in store!!!

But overall, gold has run out of steam on the upside as we expected and is trading in the range I mentioned on Monday of 1440-1480. I would expect this to remain ahead of all the figures and news. Physical buying slowed this week with China on holiday and with prices higher, but is still beneath the market, providing some support on dips. The Chinese market opened again overnight, but little in the way of gold buying was seen, which is slightly disappointing given the fact that prices are thirty to forty dollars lower than when they went on holiday. I think that in the absence of any news, I would look to sell rallies in gold and silver for the time being. My view is that the relief rally of last week is over and that we will see lower prices again. Not necessarily in the violent way we witnessed a couple of weeks ago, but rather a drift downwards. However, with all the figures out today and tomorrow, tread carefully!!

Good luck,

This report was approved and issued by Marex Financial Limited ("MFL"), a company within the Marex Spectron group. MFL is incorporated under the laws of England and Wales (company no. 5613061 and VAT registration no. GB 872 8106 13), is authorised and regulated by the Financial Services Authority (FSA registration number 442767) and is a member of the London Stock Exchange. MFL's registered address is at 155 Bishopsgate, London, EC2M 3TQ. Nothing in this report constitutes (i) an offer of services, (ii) an offer to purchase or sell investments or any other product or (iii) investment, tax or legal advice.

02 May 2013

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