The Hunger for (Cheaper) Gold Continues Unabated
The U.S. Comex gold futures surged 4.76 percent to $1,462.0 on Thursday,
about 6.6 percent below the closing level of 11 April before the rout
occurred. During Asian Friday morning, the gold futures reached as high
as 1,484.80. Gold prices have recovered roughly half of what they
lost. The Dollar Index barely budged this week and ended at 82.744 on
Thursday. The S&P 500 index, the Euro Stoxx 50 index and the CRB
Commodity Index rebounded 1.92 percent, 5.02 percent and 1.39 percent
respectively this week.
Lining up to Buy Gold
After gold has fallen into a bear market on 12 April, physical demand
has soared. According to Bloomberg, the U.S. Mint sold 196,500 ounces
of gold coins this month through 24 April, more than three times the
volume in March. Demand for gold is un-abating at both the U.S. Mint
and the U.K.’s Royal Mint. The physical gold sold to India exceeded its
highest record by 20 percent, reported by Standard Chartered. The gold
premiums in Hong Kong and Singapore reached $3 an ounce, an
eighteenth-month high. The World Gold Council in the Far East remarked
that the Asian’s hunger for the cheaper gold has exceeded the
expectation of global investors. In the past ten days in the Shanghai
Gold Exchange, the daily volume of the benchmark contract was more than
four times of the 2012’s daily average. Before the latest rout in gold,
Russia’s central bank boosted gold by 4.7 metric tons in March while
Kazakhstan bought 1.2 tons. The emerging countries’ central banks will
likely take advantage of the gold price plunge to continue to add to
gold, which is seen as an alternative currency and an inflation hedge.
Bloomberg reported that hedge fund managers turned into buyers and net
added gold for two consecutive weeks. As the global economic data have
turned softer recently, central banks such as the ECB are likely to
continue to ease rather than terminate the ease prematurely.
What to Monitor Next Week
Lots of events to watch next week including the April Germany
unemployment change on 29 April, the U.S. April consumer confidence
index on 30 April, the U.S. FOMC meeting decision and the April U.S. ISM
manufacturing index on 1 May, the ECB interest rate decision on 2 May
and the U.S. April non-farm payrolls on 2 May.
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26 Apr 2013 | Categories: Gold
