Asian gold demand 'decent', premiums 'steady' as US futures exchange cuts margin
Source: BullionVault.com , Author: Adrian Ash
Posted: Fri May 25, 2012 3:27 pm

INTERNATIONAL. London quotes for wholesale gold bars held above US$1,560 per ounce Friday morning, cutting the week's losses to 1.9% as European stock markets reversed their earlier rally and the Euro fell to a new two-year low.

Oil rose, but commodities headed for their fourth weekly loss in succession as Asian stock markets crept 0.1% higher from Thursday's near 5-month low.

Silver bullion rose above US$28.30 per ounce, recovering two-thirds of this week's 5.5% drop to Wednesday's low.

"[Mid-week] was bloodshed as panic and fear continue to dominate the market," said one Singapore dealer.

But "while Indian [physical] demand has been lower than normal, overall we continue to see decent buying interest from the rest of Asia," says today's note from Standard Bank in London, "especially South East Asia."

Premiums on gold bars traded in Tokyo rose Friday to US$1.50 per ounce above the world's benchmark price – set by quotes for London delivery – "as investors turned from sellers to buyers," says Reuters.

Gold bar premiums in Hong Kong and Singapore "were steady from last week," says the newswire.

US gold futures in contrast – where speculators have cut their bullish exposure by two-thirds from August 2011's record – will cost less in margin downpayments starting next Wednesday, the CME trading exchange said yesterday.

The second cut to margin requirements since February, the CME's move cuts the initial margin required to open a 100-ounce gold future to $9,113 – some 5.8% of the June contract's current value, and down by one-fifth from the record margin requirement reached last summer.

"Margin reductions tend to have a less immediate impact on prices than margin hikes," says ANZ Bank's commodity desk in a note.

"Nevertheless, the reduction is likely to be mildly supportive going forward."

In exchange-traded funds, Thursday saw the US$68 billion SPDR Gold Trust add 2 tonnes to the bullion holdings needed to back its shares.

Some 3.8% below its record holding of June 2010, the SPDR remained 12 tonnes lighter for the week at 1270 tonnes.

"Gold's direction seems to be driven more by the level of market risk aversion and the Euro currently," says Anne-Laure Tremblay at BNP Paribas, quoted by Reuters.

"Market sentiment on gold is fragile at the moment. A shift to a more accommodative monetary policy stance may be needed to sustain a gold bull rally."

The European Central Bank will next meet and set interest rates for the Eurozone's 330-million citizens on 6th June.

French government bond yields fell to new record lows as investors pushed prices higher, with 10-year debt offering an annual return of 2.42%.

"The current German rate is really low and yield seekers are looking for other opportunities," reckons bond trader Hajime Nagata at Diam Co., which runs $124 billion in asset and is part of Japan's second-biggest life insurance group, Dai-ichi.

Noting that the new French government of Socialist leader Francoise Hollande is raising the tax-free ceiling for domestic savings, "The assumption is that this money will be used to purchase French government bonds," Nagata is quoted by Bloomberg.

German 10-year Bund yields today held flat at 1.39% per year. Comparable US debt yields edged down to 1.76%.

The falling Euro meantime pushed the price of wholesale gold bars for Eurozone buyers back above €40,000 per kilo, unchanged for the week after an overnight dip.

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on US$3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

RELATED ARTICLES

Central bankers bought more gold while European leaders kept talking

Gold & silver rally with stocks, euro hits 23-month low, as 'Grexit' planning begins

Commodities: Gold higher on safe-haven and momentum

Gold regains role as insurance policy - Emirates NBD Precious Metals Report

Drawing lessons from Gold-Dollar relationship in 2008 and 2009

Goldman stands by gold-rally forecast even as price drops

Silver rally by no means over, could rise to US$100 - Dubai Precious Metals Conference

Central bankers leading the way on gold

A return to real money - gold and silver

Buffett is wrong on gold bubble, says Peter Schiff

James Rickards sees gold standard at US$7,000 per ounce in the face of a dollar collapse

Peter Schiff: Was 2011 the end of the gold rush?

Marc Faber, Jim Rogers clash over China and commodities, agree on gold

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: September 2, 2014
INTERNATIONAL. U.S. strategic conception must evolve away from seeing these conflicts as distinct theaters into seeing them as different aspects of the same theater: the Black Sea.
date:Posted: September 1, 2014
UAE. The Middle East's top brands have grown by an average of 38%, according to The Brand Finance Middle East 50; This brings the total value of the top 50 above US$50 billion for the first time; Emirates holds the top spot and remains far ahead of the rest.
date:Posted: September 1, 2014
SAUDI ARABIA. Consumer spending also remained robust; Non-oil exports rebound owing to greater production of petrochemicals and plastics.
dhgate