The pain in Spain hurts gold trading and price
Source: Sharps Pixley , Author: Austin Kiddle
Posted: Wed May 30, 2012 11:24 am

INTERNATIONAL. Gold Comex futures bounced back 1.3% at the end of last week but lost all the gains on Tuesday after U.S. workers came back from the Memorial Day long weekend.

Gold futures reached as high as US$1,582.4 upon New York opening on Tuesday but plunged about 2% as Euro/dollar started to slide below 1.25. Intraday on Tuesday crude oil futures also tracked the trading pattern of Euro/dollar and plunged as much as 2%, ending at US$90.76. S&P went up 1.1% while Stoxx is flat week-to-date.

US Gold futures were trading in the range of US$1,569 to $1,583 in Asia and London on Monday, higher than last week's close, as investors were relieved that the pro-bailout New Democracy Party in Greece was leading in all six opinion polls last weekend.

Stock markets also got a boost as the State Council in China has recently introduced a controlled-form of fiscal stimulus by speeding up the approval process for infrastructure projects to counter the slow down in China.

The World Gold Council estimates Chinese gold demand will rise to between 900 and 1,000 metric tons in 2012.  China's ability to maintain its growth rate above 8% will bode well for gold consumption especially when India is entering a seasonally weaker gold demand period from June to mid-August.

Gold and the U.S. stock market were also cheered by the news that U.S. home prices were falling at a slower rate.

What has caused the sharp turnaround in Euro, gold and oil? The common factor is Spain. Rating agency Egan-Jones downgraded Spain on Tuesday from Bb- to B. The Spanish government also wanted to inject sovereign bonds instead of cash to recapitalize Bankia, an idea not welcomed by investors, pushing the 10-year bond yield to 6.45%, about 25bp lower than the recent high in November 2011.

After New York market closed, the Financial Times reported that the ECB rejected Spain's proposal for ECB to lend cash to Bankia indirectly via swapping cash with sovereign bonds, thus avoiding direct capital-raising in the markets. The Spanish government increasingly urged the ECB to step up bond-buying or else the Euro currency can be threatened.

The uncertainty in Spanish banks and Greek election outlook will also likely suppress gold trading volume. Bloomberg's net speculators' combined gold positions have dropped to the level as of December 2008 at 106,996 contracts currently.

 

Note: SharpsPixley.com is the the online platform for Sharps Pixley Ltd, a physical precious metals trader.

SharpsPixley.com aims to bring you the latest gold news, live gold prices and gold charts and is an online shop for buying gold bars and gold coins.

Buying gold has never been easier or more attractive and is a great investment. SharpsPixley.com will allow those interested in buying precious metals to buy gold against the live spot price of gold, and SharpsPixley.com will keep you informed of all the latest market trends using our gold news feeds, our gold charting tools, and displaying live gold prices from around the world.

This article is republished with permission from Sharps Pixley.

Click here for more information about Sharps Pixley.

© Copyright Sharps Pixley 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

The next BIG THING in gold: Possible purchase of 1700 tonnes gold

Gold trading in a vacuum, says Ross Norman

Central bankers bought more gold while European leaders kept talking

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: August 30, 2014
INTERNATIONAL. "I believe that in the wake of the Gaza war and the basis on which the ceasefire was established, a new momentum for peace negotiations might have been created."
date:Posted: August 30, 2014
QATAR. Price increases may suggest a potential overheating of the real estate sector. Closer analysis, however, indicates that the increase is still within the fundamentals of Qatar's fast growing economy and rapid population growth.
date:Posted: August 29, 2014
KUEAIT. There is plenty of potential in the Kuwaiti market, should investor interest remain and the government carries out its proposed spending plans. The government's 2014/15 budget is expansionary, with expenditure growth of 3.2% to US$77.3 billion.
QATAR. Price increases may suggest a potential overheating of the real estate sector. Closer analysis, however, indicates that the increase is still within the fundamentals of Qatar's fast growing economy and rapid population growth.
dhgate