Gold and
Silver tumbled in early Asian trade. Gold dropped to the lowest level seen in
years falling 5,5 % since Friday trading at 1344 down 50 dollar an ounce since
Friday. Precious metals have been under continuous pressure over the last few
months. Gold fell 5,5 % during last week
and the free fall accelerated this morning.
Silver was, however, hit the hardest.
Silver is trading at USD 21.35 an ounce, down one-and-a-half dollars
since its high on Friday.
There is
confusion in the precious metals markets. Gold bulls are claiming that some big
bank and financial institutions are deliberately manipulating gold prices down,
to buy back at lower levels when central banks aggressive money printing are
going to hit the market with inflationary pressure. In such a situation,
investors will again start buying gold and silver as a hedge and traditional
safe haven.
The main
reason for the fall in prices seem, however, to be that financial investors are
liquidating,or strongly scaling down on their precious metals positions and
turned into equities. The latest numbers from the US Securities and Exchange
Commission demonstrate this development on the US SPDR GLD exchange. This
statistics also shows that John
Paulson,the billionaire hedge fund manager and the largest owner of shares in
the GLD fund, maintains his positions.
Institutional
selling of precious metals have been counter weighted by strong Asian buying of
jewellery and coins, which have provided support for gold amid consistent
selling by institutional investors. Precious metals in kind are selling USD 10
higher than “paper” gold. It is,
however, a question how long the physical buying of gold can last. Chinese
demand rose 20 % in the first quarter boosted by an increase of 19 in jewellery
and 22 percent in bar and coins. Indian demand increased similarly. Barclays Banks forecast is that gold shall
average USD 1350 in the second quarter of 2013.
Credit Suisse predicts a fall in gold prices to USD 1100 in a year’s
time.
The USD
clawed back and closed last week on its strongest level in three years against
other currencies. Euro/USD trades at
1,2843 and USD/JPY 102,64. Australian and New Zealand dollars suffered heavier
losses against the USD than their counterparts.
The Australian dollar hit its lowest level in a year on Friday. Euro and
GBP are also under strong downward pressure. Oil prices are steady with Brent
trading at USD 104,50 a barrel.
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